income tax is one that a lot of folks don t pay because their incomes aren t high enough. but pretty much everybody with a job pays a payroll tax. and that s not included in the numbers like 50% of people don t pay income taxes. the 50%, and in a normal year like 40%, are people who don t pay income tax, but only about 15% in a normal economic year don t pay income or payroll tax, and they re not people who get these credits, either. you only get these credits if you re working. and they help offset your payroll tax, often gasoline, exice taxes. we in this country have let the minimum wage and wages in general for people at the bottom of the income scale erode badly. the minimum wage is 20% lower in purchasing power today than in the 60s. the deal policymakers made is they let the minimum wage erode, but they said we ll make up for part of that by supplementing wages through the earned income tax credit. that s part of what it does.
that s why it s expiring too. the reason it got extended in 2010 was the argument the economy was incredibly weak and we couldn t raise taxes on anyone. if the economy remains too weak to raise taxes right now, you can t raise them on the poor who need more help that the wealthy, and if the economy is not too weak and it s time for the extraordinary help we re offering to end, you can also raise taxes on the rich who can bear tax increases better than the poor. now, republicans are having a little bit of trouble here because they want to somehow explain why letting the bush tax cuts expire is a tax increase while letting the obama tax cuts expire isn t. they don t need these gymnastics. they could say this is a brand new tax cut of $5 trillion and it s awesome and you should thank the republicans for being so great and letting the stimulus tax cuts expire isn t a tax increase at all. the problem is that, however, is that then republicans can no
incomes aren t high enough. but pretty much everybody with a job pays a payroll tax. and that s not included in the numbers like 50% of people don t pay income taxes. the 50%, and in a normal year like 40%, are people who don t pay income tax, but only about 15% in a normal economic year don t pay income or payroll tax, and they re not people who get these credits, either. you only get these credits if you re working. and they help offset your payroll tax, often gasoline, excise taxes. we in this country have let the minimum wage and wages in general for people at the bottom of the income scale erode badly. the minimum wage is 20% lower in purchasing power today than in the 60s. the deal policymakers made is they let the minimum wage erode, but they said we ll make up for part of that by supplementing wages through the earned income tax credit. that s part of what it does. some of the very republicans who were saying let this expire, attacking it now, in past years, when there was a
are putting over the economy with their refusal to extend the 2001 and 2003 tax relief unless they get their way on tax increases for small businesses. but hatch, to his credit, is not just complaining here. he s not just carping. he s proposed an actual alternative, the tax hike prevention act of 2012. hatch s plan would extend all of the bush tax cuts for another year. it would keep the alternative minimum tax from biting most minimum taxpayers, it would begin working on tax reform, butio know the goal it wouldn t achieve? it would not prevent a tax hike from occurring in 2013. that s why you have to read to the bottom of these things. it s right there in his press relief. it says, and i quote, there is no extension of the pay roll tax cut in the amendment. in addition, the increase spending through the tax code from the partisan 2009 stimulus law is not included in the
and it s weird because huge portions of our tax code are expiring all at once. the bush tax cuts which are worth about $5 trillion over the next decade are set to disappear at the end of the year, but they re not the only tax cuts set to expire. they re also the tax cuts that president obama passed in the stimulus and renewed in the 2010 tax deal. things like the expanded child tax credit or the pay roll tax cut, and importantly, these are tax cuts that mostly help lower income americans. they re progressive tax cuts. now, here s a problem this creates. let s say we extend all of the bush tax cuts, every single one of them. what did we just do that? did we just cut taxes by $5 trillion because we hadn t done it? there would have been a $5 billion tax increase? or did we not cut them at all because we extended rates people are paying now? you can make a reasonable argument for either way of looking at it. that is to say you can