$1M not equal to $250K
To switch the tax hike cutoff to $1 million,from the previous $250,000 cutoff of the Bush era, makes an already tight tax base too tight to raise the revenue we need
President Barack Obama speaks at the White House Forum on American Latino Heritage, Wednesday, Oct., 12, 2011, at the Interior Department in Washington. The author argues that Obama's proposed tax hikes won't help the economic crisis if the income cutoff rate for the taxes is $1million, rather than $250,000.
Pablo Martinez Monsivais/AP
I get that the Senate D’s want to pay for the President’s jobs bill by raising a tax surcharge on millionaires and billionaires, and I understand the rationale.
I also get that red is the new black, or something to that effect.
But it’s very important that we don’t allow $1 million to become the new $250,000.
That is, when people talk about sunsetting the highend Bush tax cuts, we’re using $250K as a cutoff, not $1m. To switch to the higher number makes an already tight tax base too tight to raise the revenue we need. Remember, just above 2% of households, and about the same share of small businesses,* are above $250K, so the lower cutoff is not biting the middle class. And moving to the $1m cutoff loses you slightly less than half the revenue from the highend sunset.
*The majority of “small businesses” above $1m are law practices, hedge funds, self-incorporated consultants who are not going to hire anybody, etc…not mom and pop shops.