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December 1, 2010 / Candice

Obama’s Fiscal Commission suggests TAX CUTS FOR RICH PEOPLE!! *gasp*

The Fiscal Commission published it’s report today and while it’s full of all kinds of suggestions, I feel the most important thing to look at is how it proposes we handle tax reform. Congress is set to vote on the “Bush Tax Cuts” later this month, and the public is freaking the hell out over these “tax cuts for fat cat richies” and I think it’s time to highlight who is calling for the real cuts.

First things first, these “Bush Tax Cuts” for the rich, aren’t cuts. The GOP proposal is just extending the current tax rates. They’re not cutting rates. In fact, they’re even keeping them quite high, at 35% for the top bracket. The current 2010 brackets (Remember: these are the Bush tax cuts) are 10%, 15%, 25%, 28%, 33% and 35%. If the cuts expire and nothing replaces it there will be 1 less bracket and the poor jump from a 10% rate to a 15% tax rate. The rest of the expired rates will be as follows: 28%, 31%, 36% and 39.6%. Basically a tax INCREASE for everyone, not just the rich.

The Commission that Obama appointed (meaning, it was hand picked, so the deck was stacked) is not only proposing tax cuts but DEEP cuts for the rich. The report suggests that the top rate not exceed 29%. The Obama commission is suggesting simplifying the tax rates to 12%, 22% and 28%, with 28% being the MAX rate for the rich.

Aside from the tax rate cuts, the commission is also suggesting to eliminate itemized deductions and forcing everyone to take the standard deduction. They also want capital gains and dividends taxed as regular income, not with a special rate, which is currently, under the Bush Tax Cuts, at 15%.

It also suggests decreasing the corporate tax rates currently at 35% (Bush Tax Cut rate), suggesting 23% be the lowest with the top bracket not exceeding 29%. It even suggests ending tax subsidies to corporations:

2.2.2 Eliminate all tax expenditures for businesses. Corporate tax reform should eliminate special subsidies for different industries. By eliminating business tax expenditures – currently more than 75 – the corporate tax rate can be significantly reduced while contributing to deficit reduction. A lower overall tax rate will improve American business competitiveness. Abolishing special subsidies will also create an even playing field for all businesses instead of artificially picking winners and losers.

The commission is even suggesting a 2011 payroll tax holiday. Oh my! (Slight sarcasm there folks.)

But don’t worry my dear friends, I haven’t lost my mind. I’m still not fully on board with this Commission’s report, but to be honest with you guys, I have NO problem with the simplification of our god forsaken tax code and I do believe the drastic cuts are necessary. But the suggestions in the report leave me feeling a little uneasy, like there’s a report part 2 that they forgot to publish and the other shoe will fall. The other thing is, these are simply suggestions, it takes congress to act. And given the partisan divide in D.C. I’m not going to hold my breath that we’ll see a 28% top tax rate. I highly doubt Obama will suddenly do a 180-degree turn and suddenly start loving the rich and being supportive of such a massive tax cut. But who knows, stranger things have happened I guess.

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3 Comments

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  1. Brian / Dec 1 2010 1:49 pm

    Against all expectations, they have produced a serious document. Which, of course, means it will be shot down immediately. It’s gonna be a while before we can get enough adults in Congress to make the needed changes… if ever.

    • Candice / Dec 2 2010 8:23 am

      To be honest, I was a little shocked at how reasonable it was. And then when I read the Ezra Klein article, I knew it was awesome because I’m pretty sure his head exploded just writing his response. “WHAAAAAA they want the White House and congress to take a 15% budget cut?! How can government possibly function effectively by using less money!!!”

  2. NetAdvisor™ / Dec 4 2010 12:02 am

    Under Reagan, the top tax bracket was 28% (Tax Reform Act of 1986). Now we are fighting to leave it at 35%.

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