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Tax Day rhetoric aside, Americans' bills are lower this year, but don't expect it to last | cleveland.com
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Tax Day rhetoric aside, Americans' bills are lower this year, but don't expect it to last
By Plain Dealer staff and wire reports
April 15, 2010, 2:45PM
Today is the deadline for filing taxes. You wouldn't know it by the Tax Day rhetoric, but Americans are paying lower taxes this year, even with increases passed by many states to balance their budgets.
Don't expect it to last.
Congress cut individuals' federal taxes for this year by about $173 billion shortly after President Barack Obama took office, dwarfing the $28.6 billion in increases by states.
"The fact is in the past year we have had more tax cuts than almost anytime in our nation's history," said Rep. Steve Cohen, D-Tenn. "It's something that people don't realize because of the false rhetoric that is spread throughout this Congress."
The massive economic recovery package enacted last year included about $300 billion in tax cuts over 10 years. About $232 billion was in cuts for individuals, nearly all in the first two years.
The most generous was Obama's Making Work Pay credit, which gives individuals up to $400 and couples up to $800 for 2009 and 2010. The $1,000 child tax credit was expanded to more families, and the working poor can qualify for as much as $5,657 from the Earned Income Tax Credit.
In the next few years, however, many can expect to pay more. Some future increases were enacted as part of Obama's health care overhaul. And former President George W. Bush's tax cuts expire in January. Obama and the Democrats want to renew only some of them, thus raising taxes for individuals making more than $200,000 and couples making more than $250,000.
"We know the tax man cometh, and over the next few years, boy, will he be coming with a vengeance," said Sen. Orrin Hatch, R-Utah.
As this year's April 15 federal deadline passes, the debate about future tax increases has Republicans in Congress and conservatives across the country portraying Democrats as tax-and-spend liberals even before any new levies are approved. The discussion also is helping frame the congressional elections this fall.
Grover Norquist, president of Americans for Tax Reform, said conservatives didn't see any need to wait before protesting.
"I thought that we were going to have to wait until the tax increases started to see popular unhappiness," Norquist said Wednesday. "Last year, people started reacting, the tea parties started organizing, in reaction to spending too much. They didn't wait for the tax increases to come."
Here's what some commentators have to say on Tax Day:
Just what's happening to your taxes?: CBS News' Stephanie Condon notes that with all the partisan rhetoric, it's no wonder Americans are confused. "Skepticism surrounding the president's tax policies likely stem from a variety of factors: First, it's simply harder to open one's wallet for the government during a recession, and some state and local tax increases added to some people's burden. Additionally, many Americans may be more concerned with potential tax increases in the future. On top of all that, it can simply be hard to have a firm understanding of what's going on in Washington from the hyper-partisan rhetoric often used to talk about taxes."
Tax Day tax reform: United Liberty's Kevin Boyd argues that simplyfying the tax code would make it more fair, more efficient and raise more money. "Our tax code is overly complicated, creates loopholes for special interests, overburdens Americans, makes American businesses uncompetitive, and is simply unfair to the average American. In addition, nearly 40 percent of Americans after various deductions and refundable tax credits (ie. welfare payments) are taken into account pay no income tax. The number of nonpaying Americans skyrocketed as a result of policies signed into law by George W. Bush such as the first Porkulus that he signed in 2008. Meanwhile, the nation has racked up a $12 trillion national debt and is running an annual budget deficit in excess of $1 trillion for as long as the eye can see. Clearly something has to be done."
Be glad you're not rich: NPR's Alan Greenblatt contends that while it makes sense to tax the highest earners, there's a point where taxing too much will tax the system. "Despite all the complaints that the Bush tax cuts disproportionately favored the rich, the share of federal income taxes paid by the wealthy continues to rise. And heavy reliance on top earners has turned into one of the threats to the nation's fiscal health. The ever-expanding number of credits and tax breaks for the poor and middle class have translated into a record number of people with modest means paying no net taxes at all. The discrepancy between the large amount of taxes paid by the rich and the lack of taxes paid by people with low incomes is only going to grow, given President Obama's vow not to raise taxes on the middle class. That might be good politics, and it's arguably a fair way to redistribute wealth. But a Robin Hood tax code will make it increasingly difficult to address mounting deficits, experts warn."
Some millionaires can owe no taxes: The Christian Science Monitor's Mark Trumbull explains who nearly 1,000 people who each earned more than $1 million last year can pay nothing. "The US tax code is set up to lean hardest on people with higher incomes, and $1 million is high by any standard. Yet 959 tax filers had that much income and were not taxed, according to latest (2007) data from the Internal Revenue Service. And ... 1,646 tax filers with incomes between $500,000 and $1 million were 'nontaxable,' or owed no tax that year. ... The key to the mystery is the deductions available within the maze known as the US tax code. Your income matters, but so do those deductions and credits."
Keeping things in focus: The New York Times' David Leonhart says that while it's true 47 percent of Americans don't pay taxes, the number is often used in a misleading fashion. "Forty-seven percent has become shorthand for the notion that the wealthy face a much higher tax burden than they once did while growing numbers of Americans are effectively on the dole. Neither one of those ideas is true. They rely on a cleverly selective reading of the facts. So does the 47 percent number. Given that taxes are likely to be one of the big political issues of the next few years -- and maybe the biggest one -- it's worth understanding who really pays what in taxes. Once you do, you can get a sense for our country's fiscal options. How, in other words, will we be able to close the huge looming gap between the taxes we are scheduled to pay and the services we are scheduled to receive? The answer is that tax rates almost certainly have to rise more on the affluent than on other groups. Over the last 30 years, rates have fallen more for the wealthy, and especially the very wealthy, than for any other group."
Editors Picks, Government, National News, Politics, Real Time News »
Tax Day rhetoric aside, Americans' bills are lower this year, but don't expect it to last
By Plain Dealer staff and wire reports
April 15, 2010, 2:45PM
Today is the deadline for filing taxes. You wouldn't know it by the Tax Day rhetoric, but Americans are paying lower taxes this year, even with increases passed by many states to balance their budgets.
Don't expect it to last.
Congress cut individuals' federal taxes for this year by about $173 billion shortly after President Barack Obama took office, dwarfing the $28.6 billion in increases by states.
"The fact is in the past year we have had more tax cuts than almost anytime in our nation's history," said Rep. Steve Cohen, D-Tenn. "It's something that people don't realize because of the false rhetoric that is spread throughout this Congress."
The massive economic recovery package enacted last year included about $300 billion in tax cuts over 10 years. About $232 billion was in cuts for individuals, nearly all in the first two years.
The most generous was Obama's Making Work Pay credit, which gives individuals up to $400 and couples up to $800 for 2009 and 2010. The $1,000 child tax credit was expanded to more families, and the working poor can qualify for as much as $5,657 from the Earned Income Tax Credit.
In the next few years, however, many can expect to pay more. Some future increases were enacted as part of Obama's health care overhaul. And former President George W. Bush's tax cuts expire in January. Obama and the Democrats want to renew only some of them, thus raising taxes for individuals making more than $200,000 and couples making more than $250,000.
"We know the tax man cometh, and over the next few years, boy, will he be coming with a vengeance," said Sen. Orrin Hatch, R-Utah.
As this year's April 15 federal deadline passes, the debate about future tax increases has Republicans in Congress and conservatives across the country portraying Democrats as tax-and-spend liberals even before any new levies are approved. The discussion also is helping frame the congressional elections this fall.
Grover Norquist, president of Americans for Tax Reform, said conservatives didn't see any need to wait before protesting.
"I thought that we were going to have to wait until the tax increases started to see popular unhappiness," Norquist said Wednesday. "Last year, people started reacting, the tea parties started organizing, in reaction to spending too much. They didn't wait for the tax increases to come."
Here's what some commentators have to say on Tax Day:
Just what's happening to your taxes?: CBS News' Stephanie Condon notes that with all the partisan rhetoric, it's no wonder Americans are confused. "Skepticism surrounding the president's tax policies likely stem from a variety of factors: First, it's simply harder to open one's wallet for the government during a recession, and some state and local tax increases added to some people's burden. Additionally, many Americans may be more concerned with potential tax increases in the future. On top of all that, it can simply be hard to have a firm understanding of what's going on in Washington from the hyper-partisan rhetoric often used to talk about taxes."
Tax Day tax reform: United Liberty's Kevin Boyd argues that simplyfying the tax code would make it more fair, more efficient and raise more money. "Our tax code is overly complicated, creates loopholes for special interests, overburdens Americans, makes American businesses uncompetitive, and is simply unfair to the average American. In addition, nearly 40 percent of Americans after various deductions and refundable tax credits (ie. welfare payments) are taken into account pay no income tax. The number of nonpaying Americans skyrocketed as a result of policies signed into law by George W. Bush such as the first Porkulus that he signed in 2008. Meanwhile, the nation has racked up a $12 trillion national debt and is running an annual budget deficit in excess of $1 trillion for as long as the eye can see. Clearly something has to be done."
Be glad you're not rich: NPR's Alan Greenblatt contends that while it makes sense to tax the highest earners, there's a point where taxing too much will tax the system. "Despite all the complaints that the Bush tax cuts disproportionately favored the rich, the share of federal income taxes paid by the wealthy continues to rise. And heavy reliance on top earners has turned into one of the threats to the nation's fiscal health. The ever-expanding number of credits and tax breaks for the poor and middle class have translated into a record number of people with modest means paying no net taxes at all. The discrepancy between the large amount of taxes paid by the rich and the lack of taxes paid by people with low incomes is only going to grow, given President Obama's vow not to raise taxes on the middle class. That might be good politics, and it's arguably a fair way to redistribute wealth. But a Robin Hood tax code will make it increasingly difficult to address mounting deficits, experts warn."
Some millionaires can owe no taxes: The Christian Science Monitor's Mark Trumbull explains who nearly 1,000 people who each earned more than $1 million last year can pay nothing. "The US tax code is set up to lean hardest on people with higher incomes, and $1 million is high by any standard. Yet 959 tax filers had that much income and were not taxed, according to latest (2007) data from the Internal Revenue Service. And ... 1,646 tax filers with incomes between $500,000 and $1 million were 'nontaxable,' or owed no tax that year. ... The key to the mystery is the deductions available within the maze known as the US tax code. Your income matters, but so do those deductions and credits."
Keeping things in focus: The New York Times' David Leonhart says that while it's true 47 percent of Americans don't pay taxes, the number is often used in a misleading fashion. "Forty-seven percent has become shorthand for the notion that the wealthy face a much higher tax burden than they once did while growing numbers of Americans are effectively on the dole. Neither one of those ideas is true. They rely on a cleverly selective reading of the facts. So does the 47 percent number. Given that taxes are likely to be one of the big political issues of the next few years -- and maybe the biggest one -- it's worth understanding who really pays what in taxes. Once you do, you can get a sense for our country's fiscal options. How, in other words, will we be able to close the huge looming gap between the taxes we are scheduled to pay and the services we are scheduled to receive? The answer is that tax rates almost certainly have to rise more on the affluent than on other groups. Over the last 30 years, rates have fallen more for the wealthy, and especially the very wealthy, than for any other group."
