Democrats need to get off the tax credit/cut bandwagon

[hfojvt]

Case in point, the story about Clinton's new "American Retirement Accounts"

http://news.yahoo.com/s/ap/20071009/ap_po/clinton_retirement_accounts

"Clinton said she wants to create "American Retirement Accounts" in which each family could put up to $5,000 annually in a 401(k) plan. The federal government would provide a tax cut to match the first $1,000 for any household that brings in less than $60,000 a year and 50 percent of the first $1,000 for those that make $60,000-$100,000."

First of all, this is just about like what we have now. Families can already put up to $8,000 in an IRA account and that limit is going up to $5,000. There is already a "Credit for Qualified Retirement Savings Contributions" line 32 on the 1040-A and form 8880.

http://www.irs.gov/pub/irs-pdf/f8880.pdf

That credit provides a 50% rebate on the first $2,000 for couples making less than $30,000 or individuals making less than $15,000. So the main thing this Clinton plan does is to extend this benefit to families making $30,000 - $100,000. The top quitile starts at about $85,000 (even if people unfortunate enough to live in a major metro area do not like to admit it). The top 40% starts at about $55,000. It is the top 40% that gets most of the benefits of this plan. Considering that families of four making less than $48,000 are already paying no Federal income taxes if they maximize their IRA contribution, that means many low income families will receive presicely ZERO benefit from this. Thousands of dollars going to those making over $60,000 and nothing going to those making $20,000 or less. It's like tax cut deja vu, and it is almost inevitable for any plan that relies on tax credits.

Worse yet, it reinforces the Republican talking point which says, simply stated, taxes = bad. That's not a good message to promote when we have huge deficits to deal with. To me, this is symptomatic of "Me2" Democrats. Republicans say "vote for me, I will cut taxes" Me2 Democrats say "Me too! Me too! I will cut taxes too!"

That makes it very hard for a progressive with a plan or program that will build infrastructure or help the needy. It gets shot down because it will require a tax increase to fund it, and tax increases are always bad. Everybody says so, Republicans and Democrats. To argue against that makes you sound like a flat-earther, or something even more horrifying, a "tax and spender."

It's another way a progressive message is undercut by the DLC, but even people like Mike Gravel are doing it.

[HeraldSquare212]

1. Clinton's conservatism lead her to her $ proposals

Since she couldn't offer people anything substantive that would offend the establishment, she had to give them $ instead. It's kind of interesting that her conservatism will lead to her being branded a liberal.

[hfojvt]

5. then what is Mike Gravel's excuse?

As I never tire of pointing out, his UnFairTax proposal is one of the least progressive plans there is: http://journals.democraticunderground.com/hfojvt/55

[annabanana]

2. If you don't HAVE the money..You can't SAVE the money!

Why is that so hard for people to get? All this crap.. Replace Social Security with savings accounts. Replace health insurance with savings accounts...jeebus

It doesn't matter lizard spit WHAT kind of "favorable tax arrangements" are made for that "saved money"

I get so sick of this

[hfojvt]

4. to an extent the Government saves the first $1,000 for people

but since it does so with "tax credits" that does not help people who already do not make enough money to pay income taxes. If the credits were refundable for people making less than $25,000 then a person could have $20 a week taken out of their paycheck. If the IRS changed their rules so that they with-held $20 less in taxes a week for people who did that, then it would be break-even for people who could not afford to save.

Unfortunately, the savings would only be for retirement, and calling them 401Ks makes it sound like all the money is going into mutual funds rather than savings accounts. IRA rules do allow a person to cash them in, without penalty, for things like: downpayment on a first home, medical emergencies, or loss of a job. It was only when I heard that, or that they had changed the rules that way, that I started putting money in an IRA.

[hfojvt]

3. et tu, Dennis Kucinich?

from his website:

http://www.dennis4president.com/go/issues/survival-of-the-middle-class/


"1) Double the tax refunds and credits for Americans earning $80,000 and less by shifting the tax burden to where it belongs: on the financial assets and windfall gains of those who have benefited most from our economic and legal system."


At least he stopped at $80,000 instead of going to $100,000 like Clinton, but again, tax refunds and credits are not much help to people making less than $20,000 a year and families of four making less than $40,000 a year, so most of the benefits of the above would goto those making between $50,000 and $80,000.

[hfojvt]

6. Me2, Me2!

shameless self kick!