Taxing the 2 Percent
This morning, the Times has a very good discussion about the proposed tax rates President Obama will be discussing with Congressional Republicans in the coming weeks, which is part of a larger negotiation of talks about the “fiscal cliff” (if you are bored by that term and still don’t know what that means, here’s a primer). The president wants to raise taxes for the wealthiest 2 percent of Americans, and Republicans argue that the wealthiest Americans are also job creators and small business owners, so raising taxes on them would discourage hiring. One small business owner in Cincinnati, Anne Zimmerman, whose business has made a profit of between $250,000 and $500,000 in its most recent years, would be targeted for a tax increase in the same way that someone earning $15 million would. Zimmerman shares the same viewpoint as I do:
“I’m not going to change my business decision-making process based on a few percentage points of tax increases,” she said. “If it helps get the country on a better path, well, we’re all in this together.”
It’s an idealistic point of view. I’ll concede to that. And the reality is that Obama’s plan isn’t going to fly through Congress. Here’s where the negotiations will really happen:
“But both sides have agreed in principle on raising revenue by reducing or eliminating loopholes, tax subsidies and deductions at the high end of the income scale. Even if the top rates do not rise, the efforts to limit deductions would make the tax system more progressive, with the biggest impact felt by those at the very top in incomes.”
We’ll just have to wait and see how the negotiations go.