Former Wisconsin Governor (and miserably-failed presidential candidate) Scott Walker posted this tweet yesterday:
Seems since leaving office, Walker has gone full-blown Club for Growth anti-tax lunatic with a side of President Donald Trump’s Twitter falsehood addiction.
In addition to the tax tweet pictured here, Walker tweeted yesterday about the recession in the 1970’s under President Jimmy Carter. Kind of a lay-up for a guy who will never be president to take shots at a guy who was, but whatever. History will be kinder to Jimmy Carter than to Scott Walker.
Walker cites the maximum tax rate under Carter as the cause of the recession, somehow ignoring that the worst economic collapse in the last 75 years (and what would have been the worst in history had the Fed not stepped-in) came under George W. Bush (a Republican) when top tax rates were significantly lower than in the 1970’s.
Walker also fired off three tweets yesterday about ‘Socialism’. Clearly, that is the new Republican talking point they are going to repeat in every conversation between now and the 2020 election.
The bottom line is this, and so-called conservatives like Scott Walker can argue all they want, but they lose the argument: for half a century, EVERYONE paid their fair share of taxes and America had the most vibrant economy and the largest middle class in the world. Since Reagan was elected, almost ALL the tax breaks and benefits have gone to the wealthiest Americans while the poor have become poorer and the middle class has evaporated.
The Republicans on the right need to stop the damn nonsense. The Democratic agenda is not about wealth transference from rich to poor. It is about stopping (or at least, slowing) the wealth transference from everyone else in society to the ultra-wealthy.
Sort of sad that Walker takes a cheap shot at the end of his tweet about people who don’t get it…when HE does not get it.
I talk politics. I write politics. I am always willing to engage in discussions (or arguments) about politics. But Scott Walker is becoming Donald Trump.
Well, except Scott Walker will never be president.
There can be no discussion, no attempt to find common ground, not even a civil but principled argument, when one person LIES as their opening statement.
The maximum tax rate being 70% does NOT mean that someone earning $10 pays $7 in taxes as Walker used in the example he cited as having told the school children.
That is not how progressive tax rates work.
On a side note, if Scott Walker came to my children’s school, I would keep them home that day, so they did not suffer his nonsense. School is for education, not political propaganda.
Let me run some tax table numbers by you?
If someone earns up to $160,725 per year, they pay a tax rate of 24%. They would pay 32% on income between that amount and $204, 100. That rises to 35% on income between $204,100 and $510,301. Income over $510,301 is taxed at 37%. Their entire income is not taxed at the highest rate, only the portion above $510,301.
And let’s remember one thing:
Those making above $510,301 are not even the 1% so often thrown around in tax discussions. They represent 0.7% of tax return filers.
One only need earn over $421,926 to be among the Top 1% of earners.
But remember, there are OTHER taxes at play here besides the federal income tax.
The Social Security tax rate is 6.2%. But that tax is only paid on the first $132,900 of income.
Guess what? 95% of wage earners in America earn LESS than $132,900. That means 95% of Americans pay a 6.2% tax on every dollar they earn. And their employers chip-in another 6.2%.
So, while the income tax rate gradually increases as income rises above $160,725 that additional income (as well as the income between $132,900 and $160,725) is NOT subject to the Social Security tax.
If one does the math, it works out like this:
An earner making $132,900 would pay $40,135.80 between federal income tax and Social Security tax. That is an effective tax rate of 30.4% before adding Medicare, state and local taxes, unemployment tax, and so on.
An earner making $600,000 would pay $204,381.76 between federal income tax and Social Security tax. That is an effective tax rate of 34.06%.
Not a whole lot bigger burden when earning nearly five times as much, right?
No one is proposing the effective tax rate on the highest wage earners should be 70% for ALL their income.
The plan being suggested by Congresswoman Alexandria Ocasio-Cortez has not specified where the tax scale would change and start levying 70% instead of the current top rate of 37%.
Nobel-prize winning economist Paul Krugman suggests the cutoff should be somewhere around the $10 million mark. That represents 0.5% of tax filers in America.
But remember, only 0.7% even topped the current $510,301 threshold.
Folks, we are talking about roughly 16,000 tax filers possibly paying 70% JUST ON THEIR INCOME OVER $10 million per year.
Another 22,400 or so who earn between the current threshold of $510,301 and the suggested $10 million cap might see a slight increase if that lower threshold is raised or if some intermediate rate (say, 50%) is added.
What is being suggested is a tax increase which will impact less than 40,000 people in America.
As recently as the early 1980’s, the top tax rate was 70%.
That rate was applied on incomes above $200,000.
$200,000 in 1980 is the equivalent of approximately $600,000 today.
That means if the suggested 70% tax rate were applied on all the income of the current top 37% tax rate, the highest wage earners would barely be worse off than they were in 1980 from a tax perspective.
But the Krugman plan does not look at incomes as low as $600,000.
It suggests $10 million as the threshold.
To be clear, I really do not think the math works in a way that makes the 70% proposal a viable means of raising revenue to accomplish the environmental and social goals proposed at address today’s challenges.
Revenue projections vary widely.
The Washington Post calculated a best-case scenario where the tax changes generated an extra $700 billion over the next decade.
The non-profit and independent Tax Foundation suggests that, as with any tax increase, people will find a way to legally avoid as much of the tax as possible, and the wealthiest people have the most avenues available for sheltering income from tax. Thus, they project the changes would generate only $291 billion more in tax revenue over a decade.
But it is important to note that in late 2017, the Tax Foundation scored the Republican Tax Cut (at a cost of $1.78 trillion) to cost a minimum of $516 billion over the next decade even under the rosiest of economic and trickle-down scenarios.
The Joint Committee on Taxation set the net cost at $1 billion while the Penn/Wharton model (from President Trump’s Alma mater) set the cost at $1.39 trillion.
Basically, if the best-case revenue projection for the proposed tax increase came true ($700 billion) and the best-case expense for the prior tax cut came true ($516 billion), the government would have an extra $18.4 billion per year to spend.
Look, Scott Walker is a liar, a hypocrite, and was a pretty crappy Governor. Did I mention he will never be president? And he is dead-wrong when attempting to justify his opposition to this tax proposal (well, suggestion at this point) based on Reaganomics.
But right now, there is absolutely NO upside to pushing this proposal.
With Republicans holding the Senate and the White House, there is absolutely zero possibility it passes.
Tax increases scare people even when it does not apply to them, as they always think, “Am I next?” Scared people vote for the party not making the proposal which scares them.
And with the minuscule net increase in revenue likely to be generated by this suggested tax increase, the political cost (potentially losing the House or failing to retake the Senate and White House in 2020) far outweigh any potential benefits.
In a Twitter discussion this morning with someone who was praising Alexandria Ocasio-Cortez as a “rock-star” for her outspoken ideas, I pointed out that while I am a fan, maybe we need to temper the enthusiasm just a little?
In baseball, it is an exciting thing for fans when a phenomenal prospect makes the big leagues and those fans get a glimpse of the amazing promise (and success) the future might hold. But the player still needs to prove they belong, that they are capable of competing at that level.
Congresswoman Ocasio-Cortez has been in office less than two weeks. She is making tax policy suggestions that the entire party is being forced to refute or defend. And right now, the suggestions are too vague to do either in an effective way, yet the suggestions are also too underwhelming to provide the necessary revenue boost to cover the programs the Congresswoman wants the revenue to pay for. All the suggested tax increase does is provide ammunition for Republicans and distract from Trump’s shutdown and Trump’s Mueller investigation.
Think of politics like fine dining. There is a reason the menu comes first, full of tantalizing treats that set one’s mouth to watering. The waiter cannot help but gush over the possibilities while ensuring you everything is too delicious to pass up. The check comes at the end. You can contemplate whether you got your money’s worth, but you already ate it.
For right now, set goals. Set priorities. Discuss the agenda to be undertaken when Democrats retake control of the government. Propose solutions to people’s problems, big and small, with solutions both specific and vague. But you do not open a negotiation with the bill and then try to convince the buyer they will get their money’s worth. You open with the dream and you sell them on the dream. You only let them worry about the payments once they have decided they cannot say no.