Let’s Just Call the Bush Tax Rates a Subsidy

[Wehrwolfen]

Let’s Just Call the Bush Tax Rates a Subsidy​

12/11/2012 | Daniel Horowitz


Listening to the self-righteous protestations of the class warriors, one would come away with the impression that the rich don’t pay any taxes. In fact, the top 1% of tax filers paid 37.4% of all federal income taxes in 2010; the top 2% paid almost 50%.

Unfortunately, when it comes to real handouts for the rich, liberals are silent. In their dyslexic worldview, a tax cut is a handout and a handout is a tax cut. That is why both Democrats and Republicans are plotting to surreptitiously slip in a farm bill to the final negotiations over the tax rates.

At present, more than 3/4 of farmers who earn upwards of $250,000 a year receive subsidies from at least one farm program. Farm subsidies and crop insurance programs help promote income inequality in farming by offering larger subsidies to those who already have larger farms. These farmers can enjoy multimillion dollar insurance policies that are subsidized in order to guarantee their multimillion dollar investments that would otherwise not be supported by the free market. Also, federal guarantees of bankers’ loans to rich farmers have further increased their borrowing capacity, thereby driving up the cost of land acquisition. This, in turn, has shut out small farmers from the business, making it nearly impossible for them to compete.

While liberal politicians like to talk about income inequality, they fail to mention the corporate welfare inequality. Here is what AEI scholar Vince Smith observes over at “American Boondoggle” regarding inequality in farm subsidies:

Since 1995, the top 10 percent of farm subsidy recipients have cashed 74 percent of all subsidy checks. In 2011, for instance, 26 individual holders of crop insurance policies collected more than $1 million each in subsidies to help pay their insurance premiums.​

Ironically, in the same deal where both parties plan to raise taxes on those who pay the most taxes, they want to renew and augment farm subsidies to rich farmers. Democrats in the Senate are pushing for a new shallow loss program, which extends the coverage of crop insurance from catastrophic benefits to a guarantee of 90% of the farmer’s annual revenue. The idea that the government could guarantee members of a specific profession 90% of their income, especially when food prices are so high, is an anathema to our system of free enterprise. It will also line the pockets of the very people they desire to tax.

Last June, Senator Rand Paul illustrated this liberal hypocrisy by introducing an amendment to the Farm Bill, S. 3240, which would have eliminated farm programs for those with annual income above $250,000. Only 1 Democrat (Herb Kohl) in the entire Senate voted for this amendment.

So what gives? Extending current tax rates for those earning more than $250,000 is bad; subsidies for those same rich people are good? Maybe we should just call the tax rates a subsidy, and Democrats will support full extension.


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[Mr. Peepers]

Oh don't you worry, the Organic farmer's assn. is absolutely fighting that filthy rider. I've signed the petition and e-mailed my rep.

 

[grunt11b]

I dont understand why they are still being called the Bush tax cuts anyways. I mean, it has been the same tax rate for the last ten years almost, which makes it current tax rates. They wanna pin the name Bush on it to try to make it unpopular with the base.

 

[KissMy]

Let’s Just Call the Bush Tax Rates a Subsidy

Listening to the self-righteous protestations of the class warriors, one would come away with the impression that the rich don’t pay any taxes. In fact, the top 1% of tax filers paid 37.4% of all federal income taxes in 2010; the top 2% paid almost 50%.

Unfortunately, when it comes to real handouts for the rich, liberals are silent. In their dyslexic worldview, a tax cut is a handout and a handout is a tax cut. That is why both Democrats and Republicans are plotting to surreptitiously slip in a farm bill to the final negotiations over the tax rates.

At present, more than 3/4 of farmers who earn upwards of $250,000 a year receive subsidies from at least one farm program. Farm subsidies and crop insurance programs help promote income inequality in farming by offering larger subsidies to those who already have larger farms. These farmers can enjoy multimillion dollar insurance policies that are subsidized in order to guarantee their multimillion dollar investments that would otherwise not be supported by the free market. Also, federal guarantees of bankers’ loans to rich farmers have further increased their borrowing capacity, thereby driving up the cost of land acquisition. This, in turn, has shut out small farmers from the business, making it nearly impossible for them to compete.

While liberal politicians like to talk about income inequality, they fail to mention the corporate welfare inequality. Here is what AEI scholar Vince Smith observes over at “American Boondoggle” regarding inequality in farm subsidies:

Since 1995, the top 10 percent of farm subsidy recipients have cashed 74 percent of all subsidy checks. In 2011, for instance, 26 individual holders of crop insurance policies collected more than $1 million each in subsidies to help pay their insurance premiums.

Ironically, in the same deal where both parties plan to raise taxes on those who pay the most taxes, they want to renew and augment farm subsidies to rich farmers. Democrats in the Senate are pushing for a new shallow loss program, which extends the coverage of crop insurance from catastrophic benefits to a guarantee of 90% of the farmer’s annual revenue. The idea that the government could guarantee members of a specific profession 90% of their income, especially when food prices are so high, is an anathema to our system of free enterprise. It will also line the pockets of the very people they desire to tax.

Last June, Senator Rand Paul illustrated this liberal hypocrisy by introducing an amendment to the Farm Bill, S. 3240, which would have eliminated farm programs for those with annual income above $250,000. Only 1 Democrat (Herb Kohl) in the entire Senate voted for this amendment.

So what gives? Extending current tax rates for those earning more than $250,000 is bad; subsidies for those same rich people are good? Maybe we should just call the tax rates a subsidy, and Democrats will support full extension.

Lets get a few things straight. First off the Bush tax cuts forced the Middle Class to subsidize the Rich Monopolies.

Also I am a farmer & subsidizing farmers who make over $100k is foolish. The rich wallstreet people have bought up much of the farm land to protect their wealth from inflation. They also plan to cash in on farm subsidies & the increased food consumption of the rising middle class in India & China.

 

[Soggy in NOLA]

The only way that works is if you assume the gubmint is entitled to 100% of everything.

 

[Mr. Peepers]

Yep. The mega-wealthy are special, and so get to keep every dime of their ill-gotten gains - even though they use the majority of the resources, infrastructure and energy in this country. The middle class? Not so much. They are the unwashed peons, the vile "laborers", and will thusly be punished and put in their "place" so that the wealthy can get even more... er wealthy. Welcome to 'Murka

 

[waltky]

Granny says, "Dat's right - dem rich folks can afford to pay more taxes `cause dey's companies been makin' lotsa money outsourcin' American jobs...

Taxing the rich: why $250,000 became the benchmark
December 14, 2012 - Some Democrats had sought an income threshold well above $250,000. But since the election campaign and in 'fiscal cliff' talks, that's the number President Obama has settled on. Here's what's behind it.

What is the definition of “wealthy”? This matters, especially now, as President Obama and House Speaker John Boehner try to come to terms on a package of tax hikes and spending cuts that will keep the nation from going over the "fiscal cliff" on Jan. 1. Over the years, Democrats have gone back and forth on the “wealth” question, as they have sought ways to raise more federal tax revenue. For a time, it was a taxable family income over $250,000 a year. Then last year, Democratic leaders – with New York Sen. Chuck Schumer leading the charge – decided it should really be $1 million. That’s a pretty big difference, no matter how you slice it.

After all, as Senator Schumer likes to point out, there are pricey neighborhoods in his state (and others), where $250,000 is a comfortable income, but hardly extravagant. The $250k threshold would also mean higher taxes on some small businesses, which is politically awkward. “I think we feel millionaires – that’s the fairest way to go,” Sen. Barbara Boxer (D) of California told Politico in October 2011. But then the presidential campaign kicked into gear, and Mr. Obama went back to $250,000. It was one of his mantras on the stump: The wealthiest households in America should pay modestly higher taxes on annual incomes over $250,000, the same rate they paid during the prosperous Clinton era. The million-dollar benchmark might have been easier to sell politically, but it would have meant giving up a whole lot of tax revenue – $68 billion a year, according to Bloomberg Businessweek.

For the same reason, Warren Buffett’s suggested benchmark of “maybe $500,000 or so,” as the billionaire investor wrote in The New York Times last month, also wouldn’t work. So the $250,000 family threshold (and $200,000 for individuals) looks as locked in as Obama’s insistence that the rich pay a higher tax rate, not just that they kick in more revenue to the feds. This week, Obama lowered his revenue goal from $1.6 trillion over 10 years to $1.4 trillion, a small move toward what is expected to be a final revenue number in the $1 trillion to $1.2 trillion range. The president’s allies on Capitol Hill are in lock step behind him on the $250k benchmark. “I originally believed a million dollars was the right place to draw the line,” Schumer told the Monitor Thursday. “The president campaigned on $250,000, the voters ratified that, and that’s where we are.”

It’s also worth noting that the $250,000 benchmark would end up being higher than that, as the Obama administration has bent over backwards to make sure people below $250k in taxable income don’t end up paying a higher marginal rate. A Dec. 5 report in the Times concludes that, in fact, “a large majority of families making up to $300,000 – as well as hundreds of thousands of families with even larger incomes – would not pay taxes at a higher marginal rate.” There are multiple reasons, according to reporters Catherine Rampell and Binyamin Appelbaum. “To guarantee that tax rates do not increase for any family making less than $250,000, the Obama administration proposed in 2009 to raise marginal rates on taxable income above roughly $230,000 – because the minimum amount of income a family is entitled to shelter from taxation is roughly $20,000,” they write. “But the average amount families in that income range are entitled to shelter from taxation is much larger, closer to $60,000. In other words, families with taxable income of $230,000 on average earned about $290,000 in 2009.”

Furthermore, they add, the administration is adjusting the numbers for inflation – that is, $250,000 in 2009 dollars. In effect, the Times reporters say, Obama is “now proposing to raise marginal rates on families with taxable incomes above $246,000 – meaning, on average, families earning more than about $305,000.” They cite an analysis by the Tax Policy Center that says the president’s rate hike would affect only the top 1 percent of taxpayers, instead of the 2 percent Obama often cites. Also worth noting: People below the $250,000 benchmark will be subject to other tax increases, such as those in the Affordable Care Act.

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