Effects of Various Tax Changes (not funny)

Sorry, couldn’t come up with anything snarky and amusing about this one, but the graphic is too good to not share with folks. A lot of confusion (certainly on my part) about just what the various proposed changes to the tax structure might do, and a 12/9/12 article in the NY Times by Jackie Chalmes has a table (source is Institute on Taxation and Economic Policy) that breaks down the relative contributions of each change:

variations on Obama plan

So you can see from the table that changing the top 2 marginal rates from 33 and 35% to 36 and 39.6% increase revenue by $442 Billion (10 yr). A little arithmetic teases out the individual effects of the other possible changes (using greatest increase in top marginal rates:

 Raise capital gains and dividend tax from 15% to 20%: (759-442) = $317B

 Limit deductions to 28%: (1314 – 759) = $555B

 Raise dividend tax from 20% to ordinary rate (1433 -1314) = $119B

 Raising estate taxes on estates over $3.5M from 25 to 45% would add another $200B (that’s how table got a max $1.6T gain)

Now it’s not in the table, but we can guesstimate the effect of taxing capital gains at ordinary rates. Because the table shows that raising dividend tax from 20% to ordinary (a 15 percentage point increase) adds only $119B, that suggests that the increase from 15 to 20% (5 percentage points) would be much less than $119B, perhaps one third as much, or $40B. So perhaps, $275B of the $317B gain derived from raising cap gains and dividend from 15 to 20% was due solely to the cap gains raise. Therefore, if cap gains was raised to ordinary rates, that might be expected to contribute an additional 3 x $275 = $825B

So, really, by going back to Clinton-era marginal rates, taxing dividends and capital gains at ordinary rates (as was long done and is hardly irrational—I mean, why do you pay LESS tax on money that you didn’t work to earn than money you sweated for? Oh, yeah, because that’s the kind of income rich people have), and raising the estate tax on large estates, we could reduce the deficit by $2.4T over the next 10 yr. And this doesn’t even include any efforts to make corporations pay something close to their nominal rate). But Republicans say that increasing taxes wont solve anything. Repubaloney.


Goodness knows I, like the OWSers, protest enough about the current “system.” Outside of the 1%, is there anyone who is happy with the way things are? Not too many. So what to do? Well, the Tea partiers want to take us back to 19th century robber baron capitalism on the idea that…well it’s hard to say what the idea of that is. How about us progressives? Given that we are dealing with the well known cat-herding paradigm, almost by definition, there’s no progressive platform. But I bet that a good three quarters of us support something along the lines of the following. They’re in no particular order except that for any of them to happen, the first bullet of the first point must be done—elimination of private funding of politicians. Then, anything can happen.

I’ve left out the rationales for all the platform points, as it would take thousands of words and more patience than our readers possess. Feel free to add points and rationales.


  • Public financing of elections—no direct personal, or corporate (incl. lobbyist) contributions
  • Instant-runoff elections or other alternative voting methods which will encourage 3rd and 4th party candidates
  • Direct presidential election (eg, National Popular Vote movement)


  • Reinstate Glass-Steagall to re-separate investment banking and commercial banking
  • Increase regulation of derivatives (eg, credit default swaps), including requiring transparent pricing and increased capital reserve requirements
  • Increase regulation of rating agencies (eg, Moody’s, Standard and Poor)
  • Eliminate speculators from commodity trading
  • Regulate or eliminate computerized, high-frequency trading
  • Investigate and prosecute those who helped cause financial collapse
  • Break up financial institutions that are too big to fail


  • Remove all Bush tax cuts
  • Implement simpler tax code (including taxing hedge fund managers’ fees as regular income)
  • End tax breaks for moving jobs overseas


  • Medicare for all


  • Shift from fossil fuel (eg, coal, oil, methane) to renewable energy (eg, wind, water, solar, geothermal) within 18 yrs (“clean and green in 18”) by instituting a carbon tax and switching subsidies from oil companies and ethanol to renewable, non-carbon energy
  • Strengthen the EPA


  • No more foreign wars and entanglements
  • Cut military and spying spending by half


  • Stop domestic spying
  • Habeas corpus for all citizens
  • No more rendition and torture
  • End the drug war and repeal laws against other victimless crimes

Your money or your life

I saw some car decals the other day that neatly summed up the conservative paradox. Right next to each other on the back window of a big, black SUV were the decals “T.E.A.” (taxed enough already—the TEA party) and “Semper Fi” (the slogan of the Marines). “Semper Fi,” of course is to send the message that the driver is willing to give up his life or his children’s lives to do whatAmericaneeds to have done. The “TEA” means that the driver is not willing to spend his money to do what America needs to have done.

Now I have two sons and fortunately have not had the experience of losing one of them. However, I have paid a lot of money in taxes. Although I don’t like paying taxes, I somehow don’t think the pain of spending a little more money could be anywhere near the agony of losing a child. Yet the 2 decals I saw suggest I’ve somehow got it backwards. The driver appears to value his money more than his children’s lives.

Why does the government’s call to spend your life remain unquestioned and unquestionable to the same people who march in the streets and spit venom at any governmental request for the lesser sacrifice of money? The disconnect  seems to transcend mere policy differences—the specific war we are asked to fight, the specific program we are asked to fund. A segment of our population embraces the concept of sacrificing a child and rejects the concept of sacrificing a portion of their income. But isn’t it the same thing, only of different magnitude? And the magnitude of the sacrifice is much, much greater when a life is given up. I think even the driver with the decals would admit this if asked explicitly, so I’d like to hear him explain why he glorifies the one sacrifice and vilifies the other? Are we not equally being asked to give of ourselves that others might benefit?

What’s even more interesting is the difference in the opportunity to contribute. Even if we wanted too, we couldn’t all serve in the Marines and fire a weapon on the front line, but we could all proudly pay for our government and its programs—and honor those who do.