Conservative media cry “class warfare” at prospect of less large tax cuts for top-earners

Faced with the prospect of the top two income tax rates returning to where they were in 2000, conservative media have accused Democrats of engaging in “class warfare” to attack the “so-called rich.” Economists have said that extending the Bush tax cuts for top earners -- which would reportedly cost $700 billion over ten years -- would do little to stimulate the economy; moreover, households making more than $250,000 will still pay less in taxes under Obama's plan than if all of the tax cuts were allowed to expire as Republicans originally scheduled them to do.

Economists say extending tax cuts for the wealthy would increase deficit while doing little to stimulate the economy

GOP Congress, Bush mandated that the tax cuts would expire after 2010. With the exception of changes to the estate tax, the 2001 tax bill states: “All provisions of, and amendments made by, this Act shall not apply ... to taxable, plan, or limitation years beginning after December 31, 2010.” The 2001 tax bill passed the House and Senate with near-unanimous Republican support. The 2003 tax bill -- which also passed both houses with near-unanimous Republican support -- incorporated the sunset provisions from the 2001 tax bill.

Wash. Post: Sunsets allowed GOP to “boost the size of the tax cut” while “hiding its true cost” and getting Dem support. In a May 27, 2001, article, The Washington Post reported: “By terminating the tax cuts at the end of 2010, negotiators were able to avoid some tough decisions. Since they could now distribute the same amount of money over nine years rather than 10 years, they effectively boosted the size of the tax cut while at the same time hiding its true cost.” The Post reported in a May 24, 2003, article that “by 'sunsetting' all the tax cuts well before the bill's official 2013 expiration date, congressional tax writers took a measure that otherwise would have cost the Treasury more than $800 billion over the next decade and crammed it into a $350 billion price tag that could garner just enough support to pass the Senate. Democrats and Republicans alike predict that future Congresses and administrations will not let the tax cuts expire.”

Obama wants to extend all of the lowered rates except for the top two. As The New York Times reported on August 10, Obama proposes "to extend the tax cuts for individuals with less than $200,000 in annual taxable income and couples with less than $250,000 -- about 98 percent of American households." The Times further noted:

If the president gets his way, in 2011 the top two income tax rates -- now 33 percent and 35 percent -- would revert to the levels before the Bush administration, 36 percent and 39.6 percent, respectively. But the four lower rates would remain 10 percent, 15 percent, 25 percent and 28 percent. For some taxpayers earning up to $250,000, the top marginal rate would remain 33 percent.

Extending all tax cuts for upper-earners would reportedly cost $700 billion over ten years. The Washington Post reported that an analysis by the nonpartisan Joint Committee on Taxation found that a “Republican plan to extend tax cuts for the rich would add more than $36 billion to the federal deficit next year.” The New York Times further reported that the 10-year cost of extending the tax cuts for the upper-income earners would be “about $700 billion.”

Economists: Extending the tax cuts that benefit only the wealthy is poor stimulus. Howard Gleckman of the Tax Policy Center wrote that “higher income households are more likely to bank the cash than spend it. As a result, tax cuts for these high-earners will do relatively little to boost the economy in the short run.” The nonpartisan Congressional Budget Office has also stated that as stimulus, allowing only the top tax cuts to expire “would be more cost-effective” than extending all of the cuts “because the higher-income households that would be excluded would probably save a larger fraction of their increase in after-tax income.” Nobel Prize-winning economist Paul Krugman also said of extending the tax cuts for the wealthy: “it's hard to think of a less cost-effective way to help the economy.”

Top earners would still gain from tax cuts

Wealthy taxpayers would still have lower taxes under Obama plan than if all the cuts expired as scheduled. The Times further reported that according to a Joint Committee on Taxation analysis, taxpayers with income over $250,000 would have a higher top tax rate, but would still benefit from the other “four lower rates on up to the first $250,000 of their income.” For instance, “Filers with taxable income of $500,000 to $1 million would still get on average a tax cut of $6,700 compared with pre-2001 rates, according to the data from the tax analysts. But that compares with roughly $17,500 if the top Bush tax rates were maintained.”

A tax calculator provided by National Public Radio demonstrates that if all the tax cuts were extended, a married couple earning $300,000 would pay $734 dollars less than under Obama's plan, a difference that represents 0.2 percent of the household's income. By contrast, if all the tax cuts were allowed to expire as scheduled, the household would pay $8,534 more than under Obama's plan. A graphic created by The Washington Post shows the average tax cut for taxpayers at each income level under the Democrats' plan “which extends cuts only for families making less than $250,000 a year,” and the Republicans' proposal to extend all cuts:


Conservative media accuse Dems of engaging in “class warfare” for wanting to extend most, but not all of Bush's tax cuts

Van Susteren and Carlson agree that not extending the top Bush tax cuts is “very flatly and plainly a question of class warfare.” On the September 7 edition of Fox News' On the Record, Greta Van Susteren hosted Fox News contributor Tucker Carlson to discuss President Obama's opposition to extending tax cuts for the wealthy. During the segment, Van Susteren said of Obama's decision against extending the tax cuts, “I'm wondering how much of this is legitimate economic planning, that the president truly believes this, or even, you know, Peter Orszag truly believes it, and how much of it is political in the sense trying to create almost political warfare, trying to divide the upper 2 percent from the rest of the population.” She also said that eliminating the tax cuts for the top 2 percent is “almost a class warfare political weapon.” Carlson responded:

CARLSON: Well, it's very flatly and plainly a question of class warfare. I mean, look, I'm hardly defending rich people. I'm not a rich person, unfortunately, though I aspire to that. They pay for everything in this country. The top 10 percent pays more than half of federal taxes. You take out rich people, and the country doesn't run. That's just a fact. That's not defense of a class or a social system, those are [...] numbers you can't debate.

Krauthammer: The “idea is class warfare.” On the September 1 edition of Fox News' Special Report, responding to a question on whether Obama would “veto in a recession the extension of all the current tax rates for the next year,” Charles Krauthammer said, “I think he will because that's all he's got. He can't argue his economic policies have succeeded. That's not anything anybody would believe. What the idea is class warfare. The Republicans are in favor of the rich and we are in favor of the middle class. That's all they have and they're going to stick to it.”

IBD: Pelosi, Reid, and Democratic majorities in Congress “are locked into their class warfare ideology.” In an August 12 editorial, Investor's Business Daily stated: “Unfortunately, President Obama, House Speaker Nancy Pelosi, Senate Majority Leader Harry Reid and the Democratic majorities in Congress are locked into their class warfare ideology. Allowing the job creators of the U.S. economy to keep their lowered tax rates would mean letting them keep close to $36 billion of their own money in 2011, and the party's base cannot stomach such thoughts.”

WSJ blogger: Prepare for “more sad, divisive class warfare led by your president. In an August 11 Wall Street Journal blog post, Evan Newmark wrote that “After alienating most white Americans ... President Obama and his White House gang are launching a fresh 'pitchfork and torches' assault on Republicans and America's 'rich.' ” Commenting on Treasury Secretary Timothy Geithner's statement that tax cuts for the wealthy should be allowed to expire, Newmark wrote, “This is the dry language you'd expect from a career bureaucrat. But beneath his arch tone is real class war demagoguery.” He later stated that the Obama administration understands that by “jacking taxes on America's 2 million 'rich' ” it will be difficult to “put them in the spending mood” and added, “and that's why it's back to class warfare.”

NRO post: The “progressives' class-warfare gambit may backfire disastrously this November.” In an August 10 National Review Online post headlined “The Class-Warfare Gambit,” Michael G. Franc, vice president of government relations for the Heritage Foundation, claimed that Democrats are “plan[ning]” to “soak only the top-earning households in America” when the Bush tax cuts expire on January 1, 2011. He further wrote that “the politics of 'taxing the rich' may turn out to be more complex than Democratic strategists first envisioned. Indeed, the progressives' class-warfare gambit may backfire disastrously this November.”

Armstrong Williams: “As if the race baiting by the White House weren't enough, it's now in full-throated class warfare.” In an August 8 Washington Times “analysis/opinion” piece, after correctly observing that “the tax rate cuts that President George W. Bush and the Republican led-Congress pushed through in 2001 are set to expire” on January 1, 2011, conservative political commentator Armstrong Williams claimed that the Obama administration is “pondering tax increases” and accused the Obama administration of “full-throated class warfare, pitting this faceless rich no one seems to know against the poor, who seem to be on every corner in President Obama's mind.”

LVRJ: “Mr. Obama's class warfare rhetoric and desire to expand the regulatory state only exacerbates” uncertainty on hiring. In an August 8 editorial, the Las Vegas Review-Journal wrote: “Indeed, many employers remain reluctant to expand -- perhaps either still smarting from the hit of the 2008 economic meltdown or worried about the direction this president has taken the economy. With the Bush tax cuts set to expire at the end of the year, thousands of business owners and potential entrepreneurs face an uncertain future. Mr. Obama's class warfare rhetoric and desire to expand the regulatory state only exacerbates the problem.”

IBD: The “so-called progressive left ... has used class warfare to divide us.” In an August 6 editorial, Investor's Business Daily wrote:

Instead of slashing spending, as common sense and economic reality would dictate, some want to let Bush's 2001 and 2003 tax cuts expire. Those cuts were responsible for the economy's recovery from the triple whammy of the 1999-2000 stock market meltdown, the Y2K debacle and the 2001 recession.

At the same time, Americans will be hit with a blizzard of new regulations and higher taxes from this year's health-care and financial reform laws. That could sink the economy again.

The regulatory and tax siege has sent America's entrepreneurial, job and wealth-creating class reeling. The so-called progressive left now in charge of government has used class warfare to divide us -- always blaming the “rich” (anyone who earns more than $200,000), entrepreneurs and businesses for not doing enough.

Hannity: What “do you say to Democrats who play the class warfare card” and are willing to let the Bush tax cuts expire? During a July 30 interview with Sen. Evan Bayh (D-IN) on his Fox News show, Hannity said of the Bush tax cuts:

HANNITY: Yes, look, it's going to be interesting because the president obviously wants them to expire, especially for the wealthy. What do you say to democrats who play the class warfare card and say, no we'll just let them expire for, quote, “the wealthiest Americans,” those who are making over $200,000 or more which by the way the top ten percent pay over 70 percent of the income taxes in this country. Why would you argue that's a bad idea?

Doocy: Democrats want to raise taxes on “those evil, successful people,” “the so-called rich.” On the July 27 edition of Fox & Friends, co-host Steve Doocy claimed that Democrats say “those evil, successful people at the top 3 or 4 or 5 percent -- the so-called rich Americans -- we're going to continue to tax them at a higher rate.” Doocy continued by suggesting that when you're talking about these “so-called rich Americans,” “you're not talking about Donald Trump or a member of the Rockefeller family. You're talking about a lot of people who own and operate America's small businesses.”

Thompson: Obama is “going to base this tax cut on rich versus poor.” During a July 27 interview by Sean Hannity, former Senator Fred Thompson asserted: “People are not as susceptible to having their envy played upon as this administration thinks. They think that if they can do something, even if it hurts the economy, that's going to take something away from a group that they're not a part of, the 2 or 3 percent, the way they like to put it, that that will go over well politically and they can win that, you know. Rich versus poor.” He added that the president is “going to base this tax argument on rich versus poor. Going to give everybody -- everybody in America a tax cut, in effect, or let the tax cuts remain for them, except just two or three percent of the people. That just happens to be a third of our consumers and produce most of our jobs.”