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Nuances in the tax debate
September 16, 2010 - Mike Maneval
A Wednesday editorial in the Los Angeles Times and a column in the Boston Globe attempt to clarify what is at stake as the Republican and Democratic caucuses debate extension of the 2003 tax cuts, with the Times opining, "both sides exaggerate the stakes and oversimplify the policies involved."
The Times argues that Democrats' claims the full extension of the cuts on all income brackets would weigh heavily on the deficit is out of perspective - the editorial cites an estimated difference of $70 billion more a year under the Republicans' complete extension compared to the Democrats' plan to extend the cuts for households in middle- and working-class brackets only, and then compares the difference to the overall deficits of roughly $9 trillion over a decade. Republicans' arguments that allowing the cuts for the top brackets to expire would unfairly soak small businesses, the Times' editorialists say, are untrue, citing estimates from the congressional Joint Committee on Taxation that no more than 3 percent of small businesses are at risk of being impacted.
Scot Lehigh, writing Wednesday for the Boston Globe, further observes that while the top 1 percent pay 40 percent of federal income taxes, the same 1 percent "received about 20 percent of total income in 2009, while paying 22 percent of all federal, state, and local taxes." Along with the Times, Lehigh notes that even the households hit by the top brackets - the brackets for which the Democrats would like to see the cuts expire - would still pay the same, lower rates on the first $200,000 to $250,000 claimed in income.
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