The Innovation Ohio Education Fund has released a report detailing why the best public policy for the overwhelming majority of Ohioans is to raise federal income tax rates on the top two percent of earners, while preserving the Bush tax cuts for the middle class and lower incomes.
To read the entire report, watch videos explaining some of the issues and to see a chart detailing where 73% of the Bush tax cuts have gone thus far, head on over to our fiscal cliff page.
Here’s the press release from IO Ed Fund:
Report: Tax Rates Should Go Up for the Wealthy
IO Education Fund Study Says Republican Plan Won’t Raise Enough Revenue; Could Result in Higher Taxes for Middle Class Ohioans
Columbus: The Innovation Ohio Education Fund, a sister organization to the progressive think tank Innovation Ohio headquartered in Columbus, today released a study which finds that the deficit reduction plan proposed by Congressional Republicans as part of the “fiscal cliff” negotiations would not raise enough revenue and could lead to tax increases for middle and lower income Ohioans.
The Obama Administration and House Speaker John Boehner (R-Ohio) are attempting to negotiate a deficit reduction deal by the end of the year in order to avoid the so-called “fiscal cliff” of $600 billion in tax increases and spending cuts that will take effect on January 1, 2013 in the absence of an agreement.
Both sides have offered proposals concerning the revenue increases and spending reductions each side believes are necessary. The IOEF report analyzes only the revenue recommendations made by the two sides.
Among the key findings are:
- The President’s plan, which would raise $1.6 trillion in new revenue over ten years, would not raise taxes for anyone on the first $250,000 they earn each year. Tax rates on income above that level would return to Clinton-era levels. 98.3% of Ohioans would see no tax increase, while rates would rise for just 1.7% of Ohio taxpayers.
- Two key arguments against the President’s plan –that it would hamper job creation and be especially injurious to small businesses—are not supported by economic evidence.
- The Republican plan, which relies on capping deductions for high income earners rather than higher tax rates, is not likely to yield the $800 billion in new revenue its backers claim. Both because it would require a “phase in” period, and because a deductions cap would devastate charitable giving, the Republican plan is likely to produce just $450 billion in new revenue over the ten year period.
- Any shortfall in revenue from the Republican deficit reduction plan would have to be made up either through deeper spending reductions in government programs –or by eliminating or reducing tax deductions for those earning less than $250,000 per year.
- To raise $800 billion in revenue solely by limiting deductions and closing loopholes would mean putting at risk a host of deductions and credits used by middle class and lower income Ohioans. These include deductions for home mortgage interest and state and local taxes, as well as the earned income tax credit, and tax credits for children, child care, and college expenses.
Said IOEF Communications Director Dale Butland:
“When President Obama’s revenue plan is compared with that of Congressional Republicans, there’s no doubt which one is fairer for average Ohioans. The President’s plan would not increase taxes for the 98% of Ohioans who earn less than $250,000 a year –and asks only the wealthiest 2% to pay a little bit more toward deficit reduction. The Republican plan won’t raise enough revenue –and might well result in a tax increase for middle and low income Ohioans.
“Especially since spending reductions will also have to be part of the deficit reduction equation, there is absolutely no reason to hit middle class Ohioans with a double-whammy: cutting the government programs on which they rely on the one hand –and then raising their taxes on the other. Fairness matters. And the Republicans’ obsession with protecting millionaires and billionaires at the expense of everyone else simply isn’t fair.”