by Joan Clair
[dropcap]A[/dropcap] great deal has been written about the tax bill signed into law by President Obama on December 17. “For Many Taxpayers, a Christmas Bonus,” reads the headline of one article about the new law by Stephen Ohlemacher in the West County Times.
The article includes a table of “Tax changes by income” whose source is the Tax Policy Center based in Washington, D.C. The table factors “Income Level” and whether there has been a tax reduction or a tax increase for that level.
I had to look at the table several times because what I saw was not mentioned in the article or any other article I’ve read about the new tax law. In fact, there will be no “Christmas Bonus” for taxpayers who have the lowest incomes. Rather, the taxes of lower-income wage earners were increased. This simple fact seems to have been ignored by virtually everyone who has written about the new tax law.
For example, in a letter to the editor of The Wall Street Journal, a Certified Public Accountant wrote that, other than complex changes in the estate tax, “All other tax rates are more or less staying the same.” More or less. Except for the fact that those whose incomes are less than $10,000 will receive a tax increase of $140. Taxpayers with incomes of $10,000 to $20,000 will receive a tax increase of $121, and taxpayers with incomes of $20,000 to $30,000 will receive a tax increase of $36.
Those whose incomes are between $30,000 and $500,00 will receive a tax reduction starting at $86 for incomes of $30,000 to $40,000 and going up to $1,897 for those whose incomes are between $200,000 and $500.000. In other words, apart from the reinstatement of the estate tax, only taxpayers with the lowest incomes received a tax increase.
If a tax increase of $140 doesn’t sound like a lot of money for those whose incomes are less than $10,000, think of President Obama’s proposal (which has not gone through) to offer a $250 “bonus” to Social Security recipients who will receive no increase in their benefit this year. The amount of the tax increase, $140, for those with the lowest income comes to more than half of that $250.
What led to the invisibility of those on the lowest levels of income so that these tax increases have no record, that I have been able to discover, of opposition or even indignation? We are told that Obama compromised in allowing tax cuts for the wealthiest among us in exchange for extending unemployment insurance benefits for unemployed workers. But why, from the bonanza of tax cuts and reductions, should those with the smallest incomes have been excluded?
Joel Rosenberg of the Tax Policy Center in Washington, D.C., told me in an interview that the figures in the table of the AP article are from his center and are correct. He explained that the reason why the taxes of low-income wage earners are going up is that, in spite of the fact that they may benefit from the payroll tax cut, that is not enough to compensate for a wage credit that they are losing.
Robert Johnson, a spokesperson for the Institute for New Economic Thinking, an organization which opposes “free market fundamentalism,” was quoted in the San Francisco Chronicle on December 20 as saying, “We have to reinvigorate our social contract and redefine what we mean by civil society.”
There is nothing civil about the new tax law as revealed in the Tax Policy Center’s table. The table shows those in the upper income levels receiving more and those on the lowest income levels having more taken away.