The Senate passed a budget deal that Obama would probably sign, which leaves in place the Bush tax cuts for all but the top 1% of income tax filers. That statement is a little misleading, in that it might lead one to assume that 1 out of 100 individual households will be affected. In fact, as discussed below, extremely rich people divide their assets into trusts, either for their own benefit or for the benefit of their children. The trusts are treated as separate people by the IRS, and permit lots of rich people to drop down into lower tax brackets than they would otherwise be in.

So the people affected would be those who, even after dividing their savings and investment income into trusts, find themselves filing one or more tax returns in the top bracket. Since there are more tax returns than households, the top 1% of tax returns should actually include fewer than 1% of households. I am not a tax lawyer or economist or anything, so please correct me if I’m wrong.

Grover Norquist thinks the Republicans should take this deal, and I agree with him. That is, if I thought that Americans should keep taxes as low as possible on rich people, and especially on their capital investments, regardless of the federal government’s mounting debt and the promises it made to old people who have paid into social security funds their entire lives, given the current political climate, I would be very happy about this bill.

As Norquist says: “Take the 84% of your winnings off the table.”

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