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The Tax Policy Institute of the Urban Institute and Brookings Institution has an informative table of the distribution of adjusted gross income (AGI) for the 2011 tax year:

Income Breaks, 2011

The Democratic rallying cry in the wake of the election has been to let the Bush tax cuts expire for the "top 2%" of AGI. The table at the above link shows that the top 2% cutoff is $143,705 for single filers and $477,128 for married filing jointly. That's a bit different from the $200,000/$250,000 numbers bandied about, but maybe the trial balloons shouldn't be taken too literally.

Anyway, I thought it would be interesting to see just what kind of revenue can be generated as a function of the AGI cut-off, assuming that the cut-off is a number that's negotiable.

Crunching data from the TPI table and the proposed tax rate tables I get this curve of additional revenue vs. the tax cut expiration cutoff:

So just letting the Bush tax cuts for everyone would generate over $300 billion annually. That would go a long way towards shoring up the deficit, but evidently that's not politically possible, even though this would just restore the tax rates of the Clinton years. Oh, we would plunge into an economic abyss, the economists and business analysts tell us (just as the same people said about the Clinton 1994 tax hikes and were dead wrong). Whatever, that's the political situation we're dealing with so the only question on the table is where the "tax the rich" cutoff will be in terms of the Bush tax cut expiration.

The above chart shows clearly how the Bush tax cuts were weighted toward the wealthy. Just eliminating the cuts for the top couple percent gets about a third of revenue back. The chart doesn't show much detail on the steep part of the curve, so here's the same chart with a logarithmic scale:

So that's pretty interesting. Eliminating the tax cut for the top 1% generates nearly $100 billion in annual revenue, while extending that out to 2% only generates a little more. Might that be a potential compromise, i.e., set the cutoff at 1%? That would be $193,307 single and $761,938 married.

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Comment Preferences

  •  All the stuff you just wrote is.... (3+ / 0-)
    Recommended by:
    coquiero, Words In Action, Aspe4

    ...way, WAY too difficult for the average teabagger to understand.

    They don't make compromise; they make a point, and they'll continue to make a point of not going along with anything that Obama wants.

    •  But this is aimed (0+ / 0-)

      ...at compromise by our side, i.e., we don't have to be wedded to the 2% number since, e.g., 1% gives about the same amount of revenue.

      Also, the entire Republican caucus isn't in the teabagger category--hopefully.

      •  No compromise is needed (9+ / 0-)

        The Bush tax cuts had an expiration so they should expire. They should never have been made in fact.

        It's a clear, firm line - no need to fuzzy it up.

        •  Not a clear line, nor firm (0+ / 0-)

          It appears to be an article of faith among the vast majority of Democrats that the Bush tax cuts should NOT expire for most people. The question is where is the line drawn.

          •  No question (0+ / 0-)

            at all about where the line should be drawn. Mind you, there is no question at all that climate change is a real issue but that doesn't stop your campaign to run interference on that subject.

            I am sure there is a nice third way blog out there somewhere that would resonate with you.

            •  No idea what you're talking about (0+ / 0-)

              My preference is that the tax cuts expire for everyone (i.e., return to the Clinton-era tax tables), but that is not where the majority of the Democratic Party is right now, it seems.

              And "running interference on climate change"--say what?

          •  Right, but, once they expire, (0+ / 0-)

            the Republicans will be in the position of having increased taxes for the Middle Class by not agreeing to avoid that up front.

            Purging predominantly minority voters and requiring them to present IDs to vote in the face of VIRTUALLY NON-EXISTENT VOTER FRAUD is RACISM! I hereby declare all consenting Republicans RACISTS until they stand up and object to these practices!

            by Words In Action on Thu Nov 15, 2012 at 07:01:06 AM PST

            [ Parent ]

        •  There was a good reason they had an expiration (2+ / 0-)
          Recommended by:
          Words In Action, S F Hippie

          date...the budgetary math completely exploded if there had not been a sunset date.  The whole Bush tax cut bill was based on fiscal smoke and mirrors.  I wish I could fins a link to some of the op-ed pieces that the NYT ran in the weeks leading up to passage of those tax cuts in the first place.

          Both sides went along with the charade of an expiration date, and both sides knew that the expiration date would never happen because, after 9 years of getting used to lower taxes, most Americans would see the expiration and return to "normal tax rates" as an unbearable tax increase.  That would have been the perception no matter what was going on in the economy.  It simply human nature.

          Oregon: Sure...it's cold. But it's a damp cold.

          by Keith930 on Thu Nov 15, 2012 at 05:36:59 AM PST

          [ Parent ]

      •  President said $250K for married, works form me. (4+ / 0-)

        We just had a national election where this was prominently the question. There is no reason for the President to "compromise" on this piece of it.

        Can he "compromise" on other details, sure, take cap gains only to 25% rather than to regular income, or dividends up to cap gains rate, or allow the Republican's to name the bill the "Ronald Reagan Tax Unfairness Act." He made clear what the choice was, 52% of the electorate agreed with him, that's what we should do.

  •  and unearned income? (5+ / 0-)

    What would be the result if unearned income were to be taxed the same as earned income?

  •  That issue is also the table (0+ / 0-)

    ..and could be part of a deal. I don't have the stats on that right now though.

  •  I've offered a compromise on the estate tax (3+ / 0-)
    Recommended by:
    Words In Action, ciganka, millwood

    before in comments.

    I would allow them to avoid virtually all estate taxes, IF they broke their wealth down into relatively small bequests to different individuals.  Got a billion dollars to bequeath, but don't want to pay estate taxes?  Bequeath it in chunks of 5 million or less to different people.  Want to leave it all to one child or "charity"?  Lose 3/4 or more of it to estate taxes.  I'd also tax it if the so-called charity having it left to them was one of the faux-educational political charities that 'educate' by running political ads.

    Disaggregation of wealth aggregates will end up with more of it being spent and flowing through the economy.  Even if it costs us tax revenues, I'd rather see two hundred new '5 millionaires' than one person retaining 250 million after the estate tax.

  •  Economic Abyss Comes Mostly From Spending (3+ / 0-)
    Recommended by:
    Words In Action, Gary Norton, ciganka

    cuts that accompany the restoration of Clintonian taxes under the deal, I'm pretty sure.

    Nobody should worry about the Clinton tax rates. They'll continue pumping the people's wealth to the very rich virtually as fast as today's rates do. Even in the most communistic case, nobody's proposing saving the middle class.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Thu Nov 15, 2012 at 05:25:34 AM PST

    •  CBO (1+ / 0-)
      Recommended by:
      Words In Action

      This is from an article on the CBO analysis:

      “That contraction of the economy will cause employment to decline and the unemployment rate to rise to 9.1 percent in the fourth quarter of 2013.”

      In its report, CBO made clear that the biggest impact would come from the tax increases. The agency estimated that if Congress preserves all of the current tax rates, GDP would be 1.5 percent higher than it would be if Congress allowed taxes to go up.

      I would submit that believing this requires a healthy dose of Republican/Reaganite propaganda that tax increases always slow the economy, as they predicted the same with the 1993 Omnibus budget act, and were dead wrong.
  •  $762K for a married couple???? (6+ / 0-)

    It never ceases to amaze me how many affluent people there are who think they are "just gettin' by"......I gues knowing that someone, somewhere, is making even more than you do makes you Middle Class.

    If that ends up being the cutoff point for raising taxes, and not the $250 K, then I'll say that is bullshit.  Anyone earning over $250 grand who says they can't really afford to pay more taxes is full of it.

    Oregon: Sure...it's cold. But it's a damp cold.

    by Keith930 on Thu Nov 15, 2012 at 05:31:23 AM PST

    •  True (1+ / 0-)
      Recommended by:
      ciganka

      If we just raised the rates on the top 10% it would generate over $150 billion annually and wouldn't affect single filers with AGI under $60K and married under $191K. Unfortunately Pres. Obama seems wedded to the "middle class" definition of $200K/$250K vis-a-vis a "no new taxes" pledge.

    •  Well, when you have multiple mortgages, (3+ / 0-)
      Recommended by:
      Gary Norton, tardis10, ciganka

      multiple Mercedeses, multiple private school tuition bills, constant international travel, multiple country club dues, and much more, it IS hard to get by a 3/4 of a million a year!

      And God forbid a job creator in such a position give ANYTHING up.

      Purging predominantly minority voters and requiring them to present IDs to vote in the face of VIRTUALLY NON-EXISTENT VOTER FRAUD is RACISM! I hereby declare all consenting Republicans RACISTS until they stand up and object to these practices!

      by Words In Action on Thu Nov 15, 2012 at 06:56:53 AM PST

      [ Parent ]

  •  The admin.'s proposal is (1+ / 0-)
    Recommended by:
    Words In Action

    here. http://www.taxpolicycenter.org/...

    The president would retain the current 33 percent tax bracket to avoid raising taxes on couples with AGI under $250,000 and others with AGI under $200,000.  
    The POTUS has been firm on these numbers. Could they move a bit? Sure, but I wouldn't if I were him.

    "George RR Martin is not your bitch" ~~ Neil Gaiman

    by tardis10 on Thu Nov 15, 2012 at 05:32:21 AM PST

  •  Compromise sucks. (2+ / 0-)
    Recommended by:
    Words In Action, ciganka

    Especially when one has a majority and some actual facts.

    Compromise created the Pontiac aztec, one of the ugliest, worst-designed and most useless pieces of shit ever to fall off the finished end of an assembly line.

    No compromises, tax the rich sufficiently, cut taxation on those of us earning chump change.

    That is all.

    The path of the righteous man is beset on all sides by the inequities of the selfish and the tyranny of evil men.

    by xxdr zombiexx on Thu Nov 15, 2012 at 05:51:13 AM PST

  •  Maybe it sucks (0+ / 0-)

    ...but compromise is more important than sex, i.e., when's the last time you went a week without a compromise?

  •  the bottom line (excuse the pun) seems to be (1+ / 0-)
    Recommended by:
    Words In Action

    those at the top don't want to give up their advantageous tax rates, which in many cases is ZERO, & they want to finagle any way of doing that.

    it's the old shell game -- put the pea/pebble under one shell/cup & switch all 3 three around then ask which one it's under.  the rich & their bought & paid for prostitutes in congress have tried (& still are) everything they can to delay the end of the bush tax cuts, from proposing a compromise to cutting a short-term deal.

    the prez/d's should hold firm on this.  no compromise.  no deals.  bring on sequestration & end the r's stranglehold on our economy/govt once & for all.

  •  761k for married couples would not be a compromise (3+ / 0-)
    Recommended by:
    tardis10, yella dawg, Words In Action

    It would be a capitulation, and it will never happen.  

    The President will stand firm on this.  250k it is.  You can't triple that and call it "compromise."   Most people would call it a broken campaign pledge.  

    Look, most Americans know that if you tax the rich at high rates they find ways to shelter some of that income via methods the average person has no access to.  So, even if the Bush tax cuts expire, what is the effective income you get from those sources anyway?    Taxing the 2% at Clinton rates can only be the first step.  Comprehensive tax reform is needed to stop abuse of the system by the wealthy.  Stop tax shelters for investing in overseas companies, stop tax loopholes that make it easy to move money around and never pay taxes on income, at least for earners over a certain amount, change capital gains taxes to be in line with regular income taxes, etc.  

    If you do all that you probably triple the money that comes in from these sources, so your $300 Billion becomes almost a Trillion.  

    •  If I had to make a bet (0+ / 0-)

      I would bet against those levels holding firm when it's all said and done. Pres. Obama has said what he's committed to is a "balanced approach" and raising taxes on the top brackets. He has also said that he's open to compromise.

      According to the website http://theaction.org, the rallying cry is to increase taxes on the top 2%. As pointed out in the diary, according to the linked table from the Brookings Institute, the top 2% for married filers is at $477,128 AGI, not $250,000, so these kinds of details are fuzzy. The beauty is that the amount of revenue raised is not that sensitive to the cutoff in the 1%-3% range.

      •  I think the "balanced approach" (1+ / 0-)
        Recommended by:
        tardis10

        means tax increases PLUS spending cuts. Which is reasonable, so long as it doesn't involve the safety net. There's plenty of defense spending fat, corporate welfare and oil and agricultural subsidies, etc., to cull...

        Purging predominantly minority voters and requiring them to present IDs to vote in the face of VIRTUALLY NON-EXISTENT VOTER FRAUD is RACISM! I hereby declare all consenting Republicans RACISTS until they stand up and object to these practices!

        by Words In Action on Thu Nov 15, 2012 at 06:59:33 AM PST

        [ Parent ]

  •  We need to learn how to compromise like (0+ / 0-)

    the other side does.  Start from the far out fringes.  I say the economy was doing well in the '50s.  Let's offer to roll the upper tax rates to the same as they were then.  Top marginal tax rate? 90%.  I'm sure we can reach a compromise from there.

    The electoral college was my safety school.

    by Fiddler On A Hot Tin Roof on Thu Nov 15, 2012 at 07:56:52 AM PST

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