[lbo-talk] Obama on subprime

Sean Andrews cultstud76 at gmail.com
Mon Feb 4 20:34:47 PST 2008


On Feb 3, 2008 1:13 AM, Patrick Bond <pbond at mail.ngo.za> wrote:
> Michael Pollak wrote:
>
> > the one thing you have to give Clinton credit for was that he
> > raised taxes on the rich.
> >
> Hang on, hadn't Reagan dropped the top bracket from 70% to 28%, and
> Clinton only raised that bracket to 33% which is where the
> second-highest bracket was? I'm fuzzy and wasn't in the US at the time,
> but I had the impression that this was the extent of it...

I don't know about brackets, but you're right that he didn't even get things back to the pre-Reagan level: it appears progressive against the regressive backdrop. Here's Robert Pollin on it, from _Contours of Descent_,

<Blockquote>

Clinton's tax policies lessened the highly regressive effects of the Reagan-Bush years. However, the relative burden of taxation was still more regressive when Clinton left office than in 1979, prior to Reagan's 1980 election. The Omnibus Budget reconciliation Act of 1993, which raised taxes by $240.4 billion over 5 years, increased the levy on incomes over $140,000 from 30 to 36 percent, with an additional 10 percent surcharge for incomes over $250,000. It also included a higher gasoline tax, elimination of the cap on income subject to Medicare hospital insurance tax, and a substantial extension of the Earned Income Tax Credit (EITC) program. Under EITC, which began in the Ford administration and has been supported by both Republican and Democratic administrations since, employed workers become eligible for a tax credit if their wages produce less than a certain threshold of income to support their family.

Clinton's second major piece of tax legislation was the Taxpayer Relief Act of 1997, which reduced taxes by $290 billion over 10 years--that is, reducing by half the revenues scheduled by the 1993 Act. The new law combined a range of child and education tax credits with lower taxes on inheritance and capital gains. Calculations by the Citizens for Tax Justice estimate that the net effect of the 1997 Act was to reduce taxes for the upper 60 percent of the population, with the great bulk of the cuts going to the to 20 percent.

Lawrence Mishel, Jared Bernstein and Heather Boushey of the Economic Policy Institute, drawing from CBO data, compared the total impact of the Clinton program with the Reagan record by analyzing the federal tax rates of households at 2001 income levels, under the tax laws that prevailed in 1979 (pre-Reagan), 1989 (Reagan) and 1997 (Clinton after implementation of his last major tax initiative).

<snip>

Between 1979-89, the bottom 80 percent experienced a slight 0.1 percent decline in their tax obligations, and a somewhat bigger decline of 0.9 percent between 1989-97. Most of the tax reductions under Clinton were concentrated among the least well-off 20 percent of households, who experienced a 2.9 percent decline in their fiscal burden--a drop primarily due to increased income supplements channeled through the EITC. Correspondingly, the richest 20 percent of households experienced a decline in their tax rates of 2.7 percent between 1979-89 that was reversed by Clinton when their rates rose by 2.6 percent between 1989-97. By far the biggest swing here was among the top 1 percent, who experienced a 9.1 percent tax cut between 1979-89 and a 5.1 percent increase in the period 1989-97. Thus the Clinton administration did restore part of the progressive dimension to the tax system that was lost in the 1980s, but not all of it. (26-28) <END BLOCKQUOTE>



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