Innovation Ohio

What you need to know about Ohio Politics and Policy

Republican fiscal cliff proposal to cap deductions protects the rich by harming middle-class Americans

On Friday, our sister organization, Innovation Ohio Education Fund, released a report that, among other things, compared and contrasted the fiscal cliff proposals of President Obama and Congressional Republicans. A portion of the report focused on the Republican proposal to cap deductions and close loopholes to generate $800 billion in new revenue over the next two years. The report concluded that the plan would not raise the estimated $800 billion and could lead to the elimination of other deductions that millions of Ohio families rely upon. The report focused on Speaker Boehner’s proposal which included $800 billion in new revenue. While the proposal from Speaker Boehner was strikingly absent of details, some key Republicans have publicly stated capping deductions at $25,000 a year for those making over $250,000 a year would help raise $800 billion over ten years. While on paper this may work, in reality it is much less likely to do so. [Read more…]

Research shows that the richest two percent have benefited the most from the Bush tax cuts

In July, the Center on Budget and Policy Priorities (CBPP) released a report that measured the tax benefits from the Bush tax cuts and which Americans were receiving them. Their findings reinforce what most of us have been feeling for some time – the greatest benefit from these cuts went to the wealthiest few, while the rest of Americans received significantly less benefit.

In their report the CBPP calculated the average value of the tax cuts per household since 2004 using data from the Tax Policy Center. In a report that will be released later tomorrow, Innovation Ohio used these calculations to look at what percentage of these tax cuts went to which households. As you can see in the chart below, our findings show that households that made over $200,000 a year received 73 percent of all tax benefits from the Bush tax cuts. This left the remaining 27 percent of benefits to be split between 98 percent of all households in America.

This was and currently is the economic ideology of the Republican party — cut rates for the wealthiest earners at the expense of middle  and low-income workers and hope that they don’t notice that they are getting the short-end of the deal. With income inequality growing significantly over the last decade, and the Bush tax cuts being a tool to transfer more wealth to the very well off, it is telling that congressional Republicans are insisting that rates cannot increase on the top two percent. Defending the Bush tax rates for the wealthiest two percent makes it clear who Republicans are looking out for. President Obama in his recent proposal to reach a deal on the deficit put forth a plan that raises the top rates for the richest two percent but keeps the Bush tax cut in place for the other 98 percent of Americans. The president and Congressional Democrats understand that to protect entitlements like Social Security, Medicare and Medicaid, we have to ask the wealthiest in America to pay a little more. Considering that they have been the main beneficiaries of economic policy over the last nine years, this only seems fair.

Why Raising Taxes on the Wealthiest Americans Is Not Class Warfare

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A common throw away line from conservatives in the fiscal cliff debate is that progressives or Democrats are “waging class warfare.” The trash is truly where that line belongs. The fact is that aside from a few years during the Clinton era in Washington, the economic game has been more than rigged for special interests and corporations at the expense of working Americans. There are many facts to illustrate this, here are just two:
  • Corporate profits in the U.S. have recently hit an all-time high. This comes just after the worst recession since the Great Depression and in the midst of several years’ worth of sluggish growth for the overall economy. Even with the last three U.S. recessions, corporate profit margins have been in a fantastic uptrend since the early 1980s.
  • Wages in the U.S. are at a historic low as a percentage of the overall economy. Wages in the U.S. have been on a downtrend since 1970. Compared to the parabolic rise in corporate profits since the end of the Great Recession, wages have continued to slide.
[Read more…]

Claim that leaving top 2% out of Bush Tax Cut extension will hurt small business – Not True

A common talking point from the Right is that no extension of the Bush tax cuts for the top 2 percent of incomes in the U.S. will hurt small business. Our research is not finding evidence that this is true. First, let’s hear what House Speaker John Boehner, (R-OH), has said recently about the Bush tax cuts and small businesses:

“Raising taxes on small-business people is the wrong prescription given where our economy is.” “Raising taxes on small businesses will kill jobs in America. It is as simple as that.”
Actually, it’s not so simple. The Treasury Department released a report in 2011 that tried to better define what a small business is and who exactly are the small business owners in America. The report found that very few small business owners face the top two tax rates. Treasury found that only 2.5 percent of small business owners, and 7.9 percent of filers with any income from small businesses that employ people, face the top two tax rates. Only 0.5 percent of small business owners, and 3.3 percent of filers that receive any income from small businesses that employ people, make $1 million or more per year. Giving a tax break to high income Americans would be giving a very large benefit to people who overwhelmingly do not work at or run small businesses. [Read more…]

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