Greg Walden says they will not. Let's look closely.
The current tax bill proposal allows deduction for state income taxes and property taxes, but only up to a limit of $10,000. This is a middle class tax hike.
The tax bill is still in flux, but some provisions create clear losers: young graduate students, young people with student loans, people with high medical expenses. [This just in. The current version of the bill has restored the tuition waiver and student loan deductibility, and medical expenses become deductible above a 10% threshold.] Some provisions create clear winners: wealthy inheritors, high income people who can transform their income from payroll to a pass through entity, and corporations.
Mostly the tax bill helps the very wealthy and there is a school of thought within the GOP and the donor class of both parties that says it is exactly the right thing to do. Ronald Reagan voiced it. Mitt Romney and Paul Ryan continued the GOP tradition. The theory is that wealth trickles down. Rich people are the job creators. Make the rich richer and everyone eventually profits. The wealthy create capital for investment and we are all better for that consolidation of capital. The poor spend their money as they earn it.
That is a hard sell. People don't believe it trickles down. They aren't seeing it.
So they are selling what they know voters want it to be, a middle class tax cut.
The problem is that if it cuts taxes for the middle class and for the wealthy, it blows up the deficit. The bill helps the very wealthy, but is a confusing mess for the middle class. The confusion and complications make it possible to sell the notion of a middle class tax cut in the face of statements from the CBO, independent economists, and every media source (other than Fox) reporting to the contrary.
What is the truth of it for Oregonians? Greg Walden has his message points clear and he says what he must say, that he has worked to protect Oregon's middle class. He cites a new provision: Oregonians can deduct property taxes and income taxes up to from their federal taxable income up to a cap of $10,000.
Here is what that means. It is not a middle class tax cut. It is, however, a modest tax cut for people attempting to reach the middle class. Oregonians with incomes up to approximately $75,000 will have lower taxes.
Oregonian couples with incomes above $75,000 will be hurt. Oregon couples will get to the $10,000 cap very quickly. "Starter homes" in many communities in Oregon are priced at $200,000 to $400,000. These would be homes of 1,100-1,400 square feet in stable neighborhoods. This would be the entry home into the middle class. A $300,000 home in a city in Oregon would have property taxes of a bit over $3,000 a year.
Oregon has an income tax rate of 9.9% on nearly all income. A couple with a combined income of $80,000 a year would pay Oregon income tax of approximately $7,000. Combined with the real estate tax, the couple reaches the $10,000 ceiling.
Such people have just entered the middle class. They are not poor. But any raises or improvements in their situation gets the Walden tax penalty--a tax imposed so that very wealthy inheritors can inherit $22 million tax free instead of $11 million.
Who are we talking about? A hair stylist working full time, married to a person driving a delivery truck, reaches an income of $80,000, and if they live in a small house in Oregon they meet the limit. They are middle class, barely. A hospital nurse or school teacher married to a homemaker taking care of young children reaches the ceiling. That family is middle class, barely.
Indeed, almost any couple living in a modest home and having two full time workers reaches the "middle income" and the $10,000 ceiling. People securely in the middle class will have a tax hike.
Republican office holders could make a principled argument that taxing middle income people is fair and reasonable and best for everyone. They could say that families with two incomes living in modest homes should pay more in taxes because we live in a great country and its greatness depends on the very wealthy keeping more of their money. They could argue the middle class must sacrifice so that the rich can spend. They can say that inheriting $11 million tax free is not enough and that the new proposal of $22 million tax free is actually good for the middle class. Like Senator Grassley, they could say that that nurse, school teacher, and delivery truck driver should not waste their money on booze, women, and movies and that they, too, would have a big estate.
They dare not make that argument. (Grassley has since backtracked.)
Instead they make an argument that is politically sound but factually incorrect, that the proposed tax bill is intended to be a middle class tax break, and that the tax cuts on the wealthy are incidental. It is not. The tax bill is trickle down. But it is being sold as something else.
This argument can only be sustained by arguing the "fake news" meme, insisting that people not believe credible media sources, government fact checkers, their tax preparer, and their own experience.
That is a hard sell. People don't believe it trickles down. They aren't seeing it.
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| Walden said he fixed the tax bill. |
The problem is that if it cuts taxes for the middle class and for the wealthy, it blows up the deficit. The bill helps the very wealthy, but is a confusing mess for the middle class. The confusion and complications make it possible to sell the notion of a middle class tax cut in the face of statements from the CBO, independent economists, and every media source (other than Fox) reporting to the contrary.
What is the truth of it for Oregonians? Greg Walden has his message points clear and he says what he must say, that he has worked to protect Oregon's middle class. He cites a new provision: Oregonians can deduct property taxes and income taxes up to from their federal taxable income up to a cap of $10,000.
Here is what that means. It is not a middle class tax cut. It is, however, a modest tax cut for people attempting to reach the middle class. Oregonians with incomes up to approximately $75,000 will have lower taxes.
Oregonian couples with incomes above $75,000 will be hurt. Oregon couples will get to the $10,000 cap very quickly. "Starter homes" in many communities in Oregon are priced at $200,000 to $400,000. These would be homes of 1,100-1,400 square feet in stable neighborhoods. This would be the entry home into the middle class. A $300,000 home in a city in Oregon would have property taxes of a bit over $3,000 a year.
Oregon has an income tax rate of 9.9% on nearly all income. A couple with a combined income of $80,000 a year would pay Oregon income tax of approximately $7,000. Combined with the real estate tax, the couple reaches the $10,000 ceiling.
Such people have just entered the middle class. They are not poor. But any raises or improvements in their situation gets the Walden tax penalty--a tax imposed so that very wealthy inheritors can inherit $22 million tax free instead of $11 million.
Who are we talking about? A hair stylist working full time, married to a person driving a delivery truck, reaches an income of $80,000, and if they live in a small house in Oregon they meet the limit. They are middle class, barely. A hospital nurse or school teacher married to a homemaker taking care of young children reaches the ceiling. That family is middle class, barely.
Indeed, almost any couple living in a modest home and having two full time workers reaches the "middle income" and the $10,000 ceiling. People securely in the middle class will have a tax hike.
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They dare not make that argument. (Grassley has since backtracked.)
Instead they make an argument that is politically sound but factually incorrect, that the proposed tax bill is intended to be a middle class tax break, and that the tax cuts on the wealthy are incidental. It is not. The tax bill is trickle down. But it is being sold as something else.
This argument can only be sustained by arguing the "fake news" meme, insisting that people not believe credible media sources, government fact checkers, their tax preparer, and their own experience.
2 comments:
A revealing analysis that brings us the issues of promises and reality.
Historically government fiscal policy has been nearly impossible to predict. For me the telling fact is that politicians promises are not really promises at all. A promise implies that the promiser can actually deliver what they say they will. Political promises are not binding; if they were we would see far fewer of them. They really are bets. They are gambling that fate will favor them, and if not, betting they won't be held accountable.
I think they restored the student loan interest deduction and the grad student tuition waiver exemption. Truly unbelievable, however, that a gullible, uninformed public sits idly by while these crooks rob the treasury in such a brazen,unabashed manner. Russian dissidents lament the ignorance and apathy of their citizenry. We are not far behind them. Democracy requires an informed, engaged public to survive...
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