Republicans have been defending their desire to preserve the Bush tax cuts for the wealthy — which the Obama administration would like to see expire at the end of the year — by falsely claiming that they will affect a multitude of small businesses. Florida’s Republican Senate candidate Marco Rubio is willing to take this concocted version of reality so far as to claim that it’s actually a “misnomer” to call them tax cuts for the wealthy at all:
RUBIO: There is a misnomer, it’s not the very wealthiest Americans.
Q: Top two percent.
RUBIO: No, but listen, there’s a bunch of businesses in America that pay their taxes on the personal level.
Q: Two percent of small businesses operators…
RUBIO: No, 20 million Americans work for companies who are organized as S-corporations whose taxes will go up if the Democrat [sic] plan passes.
The anchor conducting the interview was absolutely right on both counts: allowing the top two income tax brackets to rest back to the levels at which they were under President Clinton would affect about two percent of American households and fewer than two percent of small businesses. In fact, according to the Joint Committee on Taxation, about three percent of people with any business income at all — from a business large or small — would see their taxes increase under Obama’s plan.
Rubio attempts to cloud the water by pointing to S-corporations, which are companies that typically don’t pay federal corporate income taxes, but pass their earnings on to people who then file personal income taxes. However, as Dylan Matthews noted, the vast majority of those reporting S-corporation income that would be affected by the expiration of the Bush tax cuts are super-rich:
Only 34 percent of those making between $200-500,000 report making income from partnerships or S corporation, while 60.4 percent of those between $500,000 and $1 million, 78.4 percent of those making between $2-5 million, and 89.2 percent of those making over $10 million do. Given that the vast majority of high income filers–79.4 percent– make between $200-500,000, this suggests that the filers reporting small business income who would be affected by letting the tax cuts expire come disproportionately from the ranks of the super-rich.
The average annual income of those affected by the expiration of the Bush tax cuts for the rich is $800,000. And even if these rates are bumped up, due to the lower marginal rates on the lower- and middle-class that Obama would like to keep, “taxpayers with income of more than $1 million for 2011 would still receive on average a tax cut of about $6,300 compared with what they would have paid under rates in effect until 2001.”
Plus, this whole debate is occurring at a time when fully one quarter of the total income in the country is being made by the richest one percent of households. And that is no misnomer.
The rows on the farm were neat and parallel, just as they should appear: red tomatoes that started out as Iranian seeds; bulbous watermelons ripening on the vine; even peanuts. Peanuts aren’t typically a crop grown in Afghanistan, but they’re cultivated here in almost 20 rows. It’s an apparent tribute to the peanut farmer and Virginia National Guard officer who’s sponsoring this Kapisa Province agricultural project. [...] The farm is the project of the Agribusiness Development Team attached to Task Force Wolverine, the brigade-sized unit responsible for security in Bamiyan, Panjshir and Parwan provinces. The ADTs are a fairly recent initiative that bring around ten groups of National Guardsmen — in this case, 64 reservists, mostly from Kentucky — with farming experience to advise and mentor Afghan provincial officials in agricultural production techniques.
I see this as primarily a case study in the extent to which our “whole of government” efforts in Afghanistan in reality only involve a tiny fraction of the American government. I’m not 100 percent confident in my ability to read the Harmonized Tariff Schedule correctly, but we appear to levy a decent tax on imported tomatoes from Afghanistan. Peanut importation to the United States, as I understand it, is governed by a quota system. In general, the World Bank says (PDF) that Afghanistan’s exports face a worldwide average tariff rate of 10 percent.
And of course there’s the widespread direct subsidization of agriculture by developed countries, which in many respects is a bigger deal than trade restrictions per se. Dismantling the overall system of agricultural protection would likely do more to help Afghan farmers than any number of technical assistance initiatives. It would also benefit all the developed world farmers who don’t live in Afghanistan. It would be politically challenging, of course, but for what we’re happy to spend on military operations we could accrue many billions in payoffs to entrenched interests to get them to agree.
Today, South Carolina Republican gubernatorial candidate Nikki Haley unveiled her first major policy proposal of the general election campaign — a jobs plan that centers around a complete elimination of corporate income taxes. “The first thing we want to do is eliminate the corporate income tax,” Haley said. “To be able to say we are a right-to-work state and a no-corporate-income-tax state is going to cause businesses to want to come, and it will create jobs in the process.”
South Carolina collects about $260 million each year in corporate income taxes, which amounts to 4.5 percent of the general fund. A similar proposal to eliminate corporate taxes was tabled by the state senate earlier this year, due to concerns over declining revenues. These fears are well-founded: a recent report by the Center on Budget and Policy Priorities outlined deep cuts South Carolina has made since the recession began, including:
– Eliminating a program that helps seniors pay for prescription drug costs not covered by Medicare part D.
– Reducing funding for programs that serve people who have disabilities or are elderly.
– Cutting state education grants to school districts and education programs, along with higher education operating funding and financial aid.
– The South Carolina Department of Juvenile Justice has lost almost one-fourth of its state funding, resulting in over 260 layoffs and the closing of five group homes, two dormitories, and 25 after-school programs.
Though Haley claims eliminating corporate income taxes will spur job growth — something the CBO has consistently said doesn’t work at the federal level — revenue shortfalls in South Carolina are already directly threatening state worker jobs. The last state budget left 3,000 state workers facing layoffs, with even more facing furloughs.
Haley’s new plan doesn’t completely disregard state revenues, however: it notably does not include her primary campaign proposal to reduce small-business income taxes, which she now says would be addressed after corporate income taxes are eliminated. She also favors eliminating sales tax exemptions on groceries, saying that the exemptions “didn’t create one job.”
Sadly, Haley’s reckless attitude towards state tax revenue is not surprising — she has repeatedly failed to file her own income taxes on-time.
This week, Home Depot fired a new marketing salvo in what is expected to be a broader national effort to get home customers to adopt LED lighting.
The retail giant began selling one of the light bulbs in its highly energy-efficient lineup at a surprisingly affordable price of just under $20 online. Bricks-and-mortar stores will follow in September.
While $20 hardly sounds like a deal at first blush, such bulbs are expected to last as long as 30 years. Not long ago, such bulbs were not expected by most experts to cost less than $30 until 2012.
Over the last several months, I’ve noted that even while the economy is in recession and a growing number of Americans are going without health insurance coverage, the big health insurers are posting higher profits. Americans are actually using less care — filing fewer claims — but still paying more in premiums.
Wellpoint, the nation’s largest insurer by membership, “reported a 4% increase in profit for the second quarter that helped generate earnings of $1.6 billion since the beginning of the year – a 26% increase over the same period in 2009,″ and Aetna said its “second-quarter profits rose 42 percent, with a net income of $491 million, compared with $346.6 million for the same quarter last year.” Earlier this week, HCAN released a report which found that CEOs from the 10 largest for-profit health insurance companies “collected pay of $228.1 million, up from $85.5 million in 2008.” Collectively, that’s a “167 percent raise,” while “Americans saw their averages wages increase by about 2 percent.”
Insurers are spending less on health care and seeing higher profits:
Despite these riches, the industry is still lobbying regulators to soften the medical loss ratio reporting requirements and other mandates that are part of health care law. For instance, the Hill’s Healthwatch reports that lobbyists are using the August recess to lobby lawmakers “for greater flexibility” to avoid the stringent grandfathering regulations that exempt certain plans from reform’s new consumer protections. They’re pressing for rules that would allow the insurance industry to reclassify administrative expenses as medical spending and are now wrangling with regulators over “which tax payments can be deducted” from the revenue part of the medical loss ratio.
Insurers are spending millions in premium dollars to lobby for regulations that would protect their profits and argue that they could be subject to future economic woes. But the industry’s financial prowess (their incredible profits) implies that issuers can withstand fairly stringent medical loss ratio reporting requirements and afford to charge smaller premiums. That’s something regulators should remember as they’re being lobbied by insurers.
A lot of skeptical discussion about the merits of temporarily targeting a higher inflation rate seems to me to partake of a lack of appropriate historical perspective on what that would mean. If the Fed produced several years in a row of four percent inflation, wouldn’t that mean we’d all be carrying our money around in wheelbarrows? That’s not how I remember growing up in the eighties:
Paul Volcker, as I recall, is widely regarded as an inflation hawk. Indeed, he’s the man who whipped inflation! And though opinion on the merits of Ronald Reagan remains sharply divided, I’ve never heard anyone argue that he presided over inflation running amok. And yet there wasn’t a single year in the 1980s when the inflation rate fell as low as two percent. Whether the switch from the Volcker/Reagan era 4% target to the later 2% target was a good idea is something people can debate. But the notion that a temporary return to a 4% inflation rate would lead to some kind of ruinous debasement of the currency is confused.
We can follow what happened back in the 40s or 50s. I was just a little girl in Miami, and they built camps for the people that snuck into the country, because they were illegal. They put them in the camps, and they shipped them back. We can do that.
It’s not clear just what camps Baker is referring to, but in the 1940s, the United States did indeed build a series of concentration camps detaining thousands of Japanese-Americans. Years later, President Ronald Reagan signed an official apology for America’s brief experiment with concentration camps. Baker should pay heed to Reagan’s example.
So remember when I wrote a long defense of Work of Art? Heh, yeah, sorry about that. It turns out that the finale last night wasn’t very good. (Spoiler on who won here.) The producers, in a departure from the previous episodes, seemed to want us to take the contestants very seriously as artists. As I said before, what worked for me about Work of Art had more to do with the fact that it was great television than it did with the quality of the art produced on the show. Since I took it that way, I found the finale disappointing. Also is it just me or was that painting of the taxidermied dead twin deer fetuses creepy or what?
The latest poll numbers show the same thing that poll numbers have shown since January of 2009. Barack Obama is more popular than congressional Democrats who are more popular than congressional Republicans:
The vast majority of congressional Democrats have, whether deliberately or not, adopted the rationally self-interested strategy of siding with the popular Obama against the unpopular congressional GOP. But a substantial minority of congressional Democrats have consistently done the reverse—siding with the unpopular congressional GOP on the size of stimulus, on the public option, on the Consumer Financial Protection Bureau’s authority over car dealers, on taxes, and on the merits of the energy status quo.