GT:National Security Demands That We Assure That the Next Generation of the Koch Family Has the Assets to Continue the Fight on the Middle Class

GT spoke last night at Penn State on national security which he interpreted very broadly. Let's compare and contrast a couple of his statements.

First up:

"What my generation is providing you, unfortunately, is a legacy of debt," he said. "It's just not American.

He said the Obama administration needs to present -- and Congress needs to enact -- a responsible budget.

Next:

Meanwhile, Thompson said, if steep estate taxes are reinstated next year, a family passing a farm from one generation to the next may be forced to pay a 45 percent levy. That threatens to take still more farms out of business, a trend that could force more reliance on imported food over which the U.S. has little control, Thompson said.

To sum up, GT wants to deal with the national debt by adding $1.3 trillion dollars over the next ten years to the national debt by stopping a reinstatement of the estate tax. To be fair, perhaps GT just wants the tax to go back to last year's level, then the cost to the US Treasury over the same time span would be $609 billion. He justifies adding this huge burden to the national debt, which he himself says is "not American," by suggesting that the tax will impact family farms.

But it is  estimated that that in 2011 the estate tax, if reinstated at 2009 levels,  would only effected 110  family farms and small businesses and these estates on average would pay a rate of  11.3%. (The 45% number that Thompson uses for the tax rate only applies to the portion of the estate in excess of $3.5 million and of the portion above the threshold much of it can be shielded from taxes.)  Further, there is absolutely no evidence that farms would have to liquidated to pay for the estate tax. In 2001, the American Farm Bureau Federation could not cite a single example of a farm being sold off to pay the estate tax and the CBO  has estimated that under the 2009 conditions only a handful of family farms would not have sufficient liquidity to pay the tax, but it said that it likely overestimated this number since the it couldn't include certain assets held in trust.

The take away is that  GT thinks that it is in our national security interest to help  the Koch brothers pass on their wealth to their heirs so that those heirs can continue the family war against ordinary Americans.

@CongressmanBS

GT is at it again.

From Blogger Pictures

When people ask him  "How can we justify tax cuts[?]" he responds with bullshit.  Let's take a closer look at this.

First, let me concede that GT is almost correct when he says that more than 50% of those that will be affected by allowing the Bush/Cheney tax cuts to expire on high income taxpayers are small business owners. Almost because the figure applies to taxpayers that claim  small business income. Not all of these taxpayers are, in fact, small business owners. 

Setting that aside for the moment, let me  be clear that that this is not the same as 50% of small business owners will be affected by the expiration of the tax cuts, but my guess is that many who read GT's tweet get that wrong impression. And GT, or more likely a smarter staffer, probably  was aiming to induce that misunderstanding.

The nonpartisan Tax Policy Center reports that a  large proportion (33%) of taxpayers claiming small business income either have incomes too low to pay taxes or are in the lowest tax bracket. In fact, 14.5% taxpayers claiming small business income claim the Earned Income Tax Credit for low income workers.

How many taxpayers claiming small business income will be hit by the expiration of the Bush/Cheney tax cut on high income taxpayers? That would be 1.9%,  again according to the nonpartisan Tax Policy Center.  But about half of these taxpayers aren't small business owners. Included in this number are high income investors who receive part of their income from investments in small business. As the Tax Policy Center noted, of the 1.9% of taxpayers  with

...small-business income who face one of the top two tax rates are merely passive investors who have nothing to do with running the business. This is because the Tax Policy Center data cited above use the Treasury Department’s relatively broad definition of “small business.” Under the Treasury definition, for example, the $84 of income President Bush received in 2001 from a passive investment in an oil and gas company7 made him a “small-business owner.” About 35 percent of “small-business owners” with incomes above $200,000, and about 58 percent of “small-business owners” with incomes over $1 million, received some or all of their business income in the form of passive investments. The Treasury definition also counts as “small-business income” the fees that CEOs are paid for sitting on corporate boards.

From Blogger Pictures

So we see the reason that  more than 50% of taxpayers who would see their tax bill go up after the Bush/Cheney tax cut expires are "small business owners" is that many high income earners get some of their income classified by Treasury as coming from a small business even though they are not small business owners.

How much would extending the Bush/Cheney cuts for ten years cost the US Treasury? That would be $678 billion.

An how many jobs would we get for that price tag? Not too many would be my guess. Recall,  that during the whole Bush presidency while these cuts were in effect, which included, let us not forget, the housing bubble, the rate of job creation never matched that during the Clinton years. 

But I'd  still be interested in hearing how many jobs GT thinks this $678 billion give away to the rich would create and why?. Comon', give us a ballpark figure GT.

(h/t Kevin Drum)

Technorati Tags: Bush/Cheney tax cut extension, Rep. Glenn Thompson (R-PA5)

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