This article distorts the tax increase Clinton put forth in 1993 (during one of the two years when he had a Democratic Congress). His tax hike (which he had indeed promised…his campaign was about raising taxes on those making 200k a year or more), did the following:
1)Increase the highest tax bracket to 36% with a 10% surcharge for the highest wage earnings, making the top effective tax bracket 39.6%
2)Repeal the cap on medicare taxes. As you know when you get your check now, two taxes are taken out that were essentially both lumped together as “FICA” pre-Clinton. Now they are listed as Social Security and Medicare. Social Security still has a cap, currently I believe it’s 102k/year…so you are paying 6.2% on the first 102k of income, after that, you pay nothing. Medicare represents the other 1.45% of the total 7.65% FICA tax, and prior to Clinton, those taxes weren’t collected after the first $x in income, at the time I think the cap was around $75k, but that number is adjusted for inflation every year. So that tax also only hit those making the highest wages.
3) Raised the corporate income tax rate to 35%
4) Permanently extended the phase out of personal exemptions and phase down of itemized deductions as salary increased
5) Increased the taxable portion of Social Security benefits for the highest wage earners.
and the last one was a tax hike on everyone, but really costs the average taxpayer $27 a year -
6) an increase of 4.5 cents in the Federal tax on gas (and remember in the Clinton years we were paying between 80 cents and a buck twenty five for gas, not $4).
Conversely, when Clinton finally did get a package of tax cuts through (because Republicans took over Congress in ‘94 and much progress halted…remember the government shutdown?), to get tax breaks for the middle class, he also had to agree to tax breaks for the wealthy. So he got a $500 per child tax credit. He got Hope and Lifetime Learning Tax Credits. He got Roth and Education IRAs. But he also had to lower the capital gains tax from 28 to 20%. He also had to increase the estate tax exemption from $600k to $1m (which went to $2M and then was taken away altogether by Republicans). He agreed to an alternative minimum tax, which was not indexed properly and is NOW squeezing the middle class…something it was never intended to do, but which 12 years of a Republican Congress failed to fix.
It’s not as simple as boiling it down to what someone said in the campaign and how they “backpedaled”. Obama’s plan actually seems more flushed out than Clinton’s did for one thing, there are a LOT more specifics, and essentially while you might be able to point to a period of explosive growth if you just give the rich all the tax breaks in the world, you also see a widening gap in incomes and net worth, and eventually, the whole thing comes crashing down.
One hidden side to the whole taxation thing is this…you can keep taxes lower for the people who have the money, but then you have to spend less, and one way to do that is to give less money to states, counties and cities. They then have to find ways to cut services (which go to the people who need them the most), and boost revenues. And though states collect income taxes, states, cities and counties have a NUMBER of ways to raise revenue which have NOTHING to do with income. Like sales taxes built into or added onto things. Fees for licenses for yourself, your vehicles, etc. Taxes on gas, taxes on services, taxes on property (owned or rented), fees added to hotel rooms, event tickets, you name it. There are so many ways to tack on hidden taxes that people won’t even ultimately think of as a tax hike that it’s the great untold secret of the conservative “low taxes on the rich” chorus. But these kinds of things are no big deal if you’re making a decent salary. Unfortunately, if you’re making minimum wage, and barely surviving, and extra 2 grand a year in hidden taxes can mean a LOT.
The reason we have a progressive tax, and why we need to hike taxes on the wealthy, which Clinton knew (but definitely did not go far enough on) is that the wealthy are also beneficiaries of loopholes, breaks and shelters that regular people (the non investor class) cannot afford. If we just look at income, it might actually seem that the wealthy pay a higher percentage of the taxes than they bring home in income. But when you can call something “capital gains” and roll it forward indefinitely and never call it “income”, that’s the rub. So, basically people who have more SHOULD be expected to pay more, because even though income taxes may seem out of proportion, all other taxes are out of proportion the opposite way, and income taxation should be the great equalizer.
If we ask people to pay their fair share “overall”, then we can have money to invest in the things that will stimulate our economy. We had a huge boom in technology towards the end of the 90s that brought us all up. If we can invest in green technologies like Obama wants to, we can have another boom, and one that will never stop because energy needs are a growth industry. But if we don’t collect the money to do these things, we can’t make these investments, and I see no reason why the people who can afford the investments, who are now not paying as much in overall taxes as a percent of their incomes, should not be asked to help.
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