The Rich Will Get A Tax Cut Under Under The Proposed Tax Plan Of Obama

There seems to be a misunderstanding of just what President Obama has proposed to do with the Bush tax cuts. He has proposed cutting off those cuts at $250,000. The Republicans have been busy feeling sorry for the poor rich people (those making more than $250,000 a year). They would have you believe that the rich will get no tax cut at all under the Obama plan -- but that's just not true. The rich, thanks to our system of progressive taxation, will get the same cut as those making $250,000 (and more than those making less than that). They just won't get to keep the tax cut on the amount they make over $250,000. Here's how Think Progress puts it:

The Obama plan still maintains a tax cut for every single income earner, regardless of how much he or she makes. Every earner still receives the tax cut on income up to $250,000 — only after it passes that threshold will it be subject to a higher tax rate. Someone who makes $250,001, for instance, will pay the higher rate on exactly $1.

This is shown by the chart above. The blue bars on the chart are for the cut proposed by President Obama, while the red bars represent the current Bush tax cuts. Note that every segment of earners in this country will get a tax cut under the Obama plan (and in fact, for the bottom 95% the Obama plan will actually mean a few dollars more they could keep). The only difference is the richest 1% would not get to keep the cut on money they make above $250,000 (and many of them make far more than that).

This seems imminently fair -- since the rich are making more than since before the Great Depression, and paying less in taxes than since before World War II. Even if they don't get to keep the tax cut on earnings above $250,000, they will still get a cut and the rate they pay will still be a very low one historically. The Republicans claim they are worried about the deficit. If so, then this is a good start on reducing that deficit -- and it makes a lot more sense than taking food out of the mouths of poor children (which they have proposed).