The Big Double Dip: Not One But Two Tax Breaks for the Wealthiest Michiganders

Economists and newspapers are reporting that the recession may be heading for a double dip. Well, it might interest you to know that while most working families are in the economic struggle of their lives, the wealthy are asking for a double dip, and it’s not of chocolate ice cream.

Despite what you might have heard in the media, the tax debate in Washington is not about a tax increase on working and middle income families like yourselves– it is about whether the wealthiest Americans will receive not one, but two huge tax cuts.

Let’s take a minute and look at how this works. Although some in the Senate are balking, most observers think that sometime between now and the end of the year, Congress will vote to make the 2001 and 2003 tax cuts for working, middle-income Americans permanent. If Congress does this, it’s also a tax cut for the wealthiest one percent of Americans. That’s because the middle-income tax cut applies to the first $200,000 in income for individuals and the first $250,000 for married Michiganders filing jointly.

In Michigan, for example, the wealthiest one percent – an individual making more than $962,999 – will receive an average of $24,721 in 2010 as a result of middle-class tax cuts being made permanent, which President Obama has proposed. But if the upper-income tax cuts are extended as well – something almost all Republicans and a few Democrats favor – the upper one percent of Michiganders will receive a total tax break of $61,912 – a difference of $37,192 between the Obama approach and the Republican approach.

Interestingly enough, even rank-and-file Republicans are weary of this proposed largesse. A recent CNN poll found that exactly 50 percent of Republicans surveyed oppose giving those who make more than $250,000 this huge break (among independents, it was 65 percent; among Democrats, 87 percent. Overall, 69 percent want the wealthiest Americans to pay their fair share.)

By contrast, almost everyone favors continuing the middle class tax cuts – 82 percent overall, 80 percent of Democrats, 78 percent of independents, 90 percent of Republicans. And remember: the wealthiest Americans still will benefit under Obama’s proposal – an average of $24,721 each for the wealthiest Michiganders.

Michigan Citizen Action supports making the wealthiest Americans pay their fair share.  Michigan Citizen Action is a member of Americans for Responsible Taxes, a national coalition of more than 80 national groups. Americans for Responsible Taxes represents concerned communities and working families united to repeal the Bush-era tax cuts for the wealthiest, reinstate the estate tax to at least 2009 levels, close tax loopholes, and protect working families by rewarding their work with tax relief.

Those who oppose responsible taxes say they are concerned about the deficit. But the Robin Hood-in-reverse approach of making permanent tax cuts for the rich actually would add a trillion dollars to the deficit.

But it is important to understand that under the radical proposal to allow double-dipping for the wealthiest taxpayers, Michigan’s middle-class taxpayers would be gouged in two ways. First, the rich would get a much larger share of the permanent tax cuts. And second, because giving two tax breaks to the wealthy would take almost one trillion dollars out of the federal budget, cuts would have to come from somewhere – and those cuts will be job killers, though eliminating and reducing important programs that we all depend on. Likely targets? Teachers, first-responders, environmental protection, regulating safety in the workplace, you name it. Michigan taxpayers would have a choice: accept cuts in popular programs, or make up the difference – meaning higher taxes on the local or state level.

When the debate over taxes returns to Washington, D.C., don’t be fooled by the terms of debate.  Tax breaks for working and middle income families are responsible and necessary but the extra tax break for the wealthiest Americans is like giving some folks two dips of ice cream while everybody else gets one.

This entry was posted on August 31, 2010 at 11:17 am. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

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