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Bonus Tax Cuts Should Not Be Extended

Not extending the Bush tax cuts for the wealthiest Americans would only cost them a fraction of the wealth they accrued over the past decade.

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It’s the big debate in Washington—extend the “tax cuts for the middle class” alone or include the “tax cuts for the wealthy,” too. A choice between “us” or “them and us.” But really, it’s not a question of whether everyone gets their tax cuts extended. It’s a question of whether everyone gets something and the rich get a bonus.

Remember, these are the tax cuts of George Walker Bush. You think he really passed a “middle-class tax cut”? Even the so-called “middle-class” cuts actually give more money to the best-off 20 percent of Americans than they do to everyone else. To oversimplify, these cuts reduce everyone’s taxes on their first $250,000 of income ($200,000 for singles). Of course, if you only have $50,000 of income then you don’t get the full benefit—you just get a tax cut on $50,000 of income. But if you have $1,000,000 of income, you get a tax cut on $250,000 of income. Yes, the middle class benefits from these cuts but so do the wealthy.

The rest of the tax cuts, the part that President Barack Obama doesn’t want to extend, are an added bonus for the rich. They only go to the wealthiest 2 percent.

Extending the “everyone tax cuts” (to coin a more accurate name) makes some economic sense right now. Middle-class people are hurting in this recession and in the end it’s the middle class that’s going to bring the economy back—getting back on their feet as consumers, homebuyers, and savers. Some of the “everyone” cuts end up going to the rich but that too helps some and it’s not as skewed as the bonus cuts.

What we really don’t need is to give the wealthiest 2 percent a bonus. This will do little to help the economy and create jobs.

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