Looking at these facts, I guess one could argue that Feingold is in favor of perpetuating tax loopholes that disproportionately benefit upper-bracket taxpayers.I was being a bit facetious in an attempt to make a point. I don't really believe that Russ Feingold is actively trying to benefit the wealthy. But by now, I haven't seen anything from Feingold to make me believe he's seen the error of his ways. In fact, I'm beginning to wonder if he can even recognize the reality of our current situation.
Here he is in a recent interview:
So, my view is we should not be continuing the tax cuts for upper-income people. We can't afford it we couldn't afford it then, we can't afford it now. Those tax cuts clearly have not provided the job growth that they claim it will do so. Why would people argue that it should continue? The middle class tax cuts are something far more legitimate that working families in this country deserve and need at this point.And here's a new post by Howard Gleckman of the non-partisan Tax Policy Center (my bold):
Thus, those Bush-era tax cuts did play a part in boosting after tax-incomes for high-earners. But for the most part, those folks got rich thanks to the money they made, not from the taxes they saved.
Feingold is one of the few politicians talking about tax subsidies like the mortgage interest deduction. The only problem is he is fiercely protecting it!And remember that President Obama’s proposal to extend the tax cuts for income under $200,000 (or $250,00 for couples) would still increase after-tax incomes for the highest earners by about 2 percent--relative to all the tax cuts expiring....
But keep in mind that the CBO calculations show the direct impact of tax payments (as well as federal income transfers such as Social Security) on income. They exclude a potentially more important factor—how the tax laws helped high-earners make their money in the first place. For instance, a lot of folks got very rich in the real estate business over this period—an industry fueled by tax subsidies. And few politicians are talking about addressing those tax code issues.
Feingold is apparently counting on the fact that arguing to increase taxes on the wealthy makes for a good sound bite and that voters won't think it through. The fact of the matter is that the wealthy will still benefit from the lower tax rates on income less than $250,000 and they will still benefit from tax expenditures like the mortgage interest deduction, which Feingold has basically taken off the table when it comes to fixing this nation's broken tax system.
I'll say again that ending the mortgage interest deduction would be a major upheaval, and is not to be taken lightly, but you can't have a serious conversation about taxes without considering it.
For someone who promotes himself as a Senator who champions the common man over the wealthy, during this campaign Feingold seems to be advocating policies that do just the opposite. He seems to be doing so out of ignorance and not malice, but that's of little comfort to the voters of Wisconsin.
7 comments:
ending the mortgage interest deduction....
...would be a start to FAIR Tax regime.
I second that Dadster.
Just how does the mortgage interest deduction porprotionally benefit the rich? Seems to me that a lot of people who are not rich have mortgages.
Raising the highest marginal tax rates is a step in the right direction. Closing deductions that
disproportionately benefit upper-bracket taxpayers is important too but mortgage interest deductions? Come on.
Dean,
I think that is exactly the attitude Feingold is counting on. If we raise the marginal rates on the rich, things will be more "fair", right?
Look at what the Tax Policy Center says, the marginal rates are a part of the story, but the mortgage interest deduction matters too.
If a deduction allows a dollar to avoid taxation, who gains more from that deduction, someone in a high marginal bracket or a low one?
Add to that the fact that the wealthy are far more likely to itemize (which is required in order to claim the MID) and you have a system that disproportionately helps the wealthy.
Feingold either needs to educate himself about the facts or stop saying that he is fighting to make our tax system more progressive while he defends the MID.
Sorry Jeremy but I disagree. MID is reasonable as an expense. Could it be abused as in MID on multiple houses? Perhaps, I do not claim to be a tax consultant. Interest expense is also a resonable deduction for a business, would you eliminate it as well? For that matter the less well off pay higher interest rates so that expense is lower for them therefore the amount they might claim as a deduction is less. It seems to me there are likely to be other deductions that are more questionable.
Increasing the marginal tax rate is clearly more progressive. I seems rediculus to me that you are basically saying Feingold is not progressive enough. Who are you trying to snow?
Dean,
Something like 20% of all Americans itemize their taxes but well over half of Americans own a home. IOW, on average the upper class and ultra rich benefit from the MID. It's not a rule of thumb. I'm not rich and have two properties and take the MID on both. It's not in my interest to eliminate the MID. But I realize that I fall outside of the norm.
Plus, eliminating the MID is a more progressive method of taxation which provides more protection against excessive speculation in the Real Estate market.
Win, win.
Actually, it IS a rule of thumb but not a perfect science.
I think that's what I was trying to say.
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