The middle-class-first plan doesn’t leave out the wealthy

THE MIDDLE-CLASS-FIRST PLAN DOESN’T LEAVE OUT THE WEALTHY…. Following up on the last item, I described the middle-class-first tax plan as a proposal that would give permanent cuts to those making less than $250,000, but bring the wealthy back to Clinton-era rates. An emailer reminds me that this shorthand description isn’t quite detailed enough.


It’s a fair point, so let’s be more precise. Under the proposal that Greg Sargent reports is under consideration, House Democrats would hold a vote on the same plan President Obama has pushed for years. The rates that are due to expire, by Republican design, at year’s end would be extended permanently for those making under $250,000. The top rates for the wealthy would return to Clinton-era rates, but that’s all that would go up — these folks would still get tax breaks on their first quarter-million in income.

This chart, published by the Washington Post back in August, continues to be the best illustration I’ve seen on who would benefit by the competing plans in 2011. The columns show the size of the tax break by income level, and you’ll no doubt notice that both the Democratic and Republican approaches would give breaks to every income group. The difference, of course, is with which groups get the biggest break.

The column on the left shows what I’ve been calling the middle-class-first approach — everyone gets a tax cut, but the benefits are spread out, with a focus on the middle. The column on the right shows the Republican alternative — a permanent extension of Bush’s failed policy — which clearly directs the bulk of money to the very wealthy.

The right insists that the column on the left isn’t good enough, because it doesn’t do enough to help the rich. Indeed, some have even suggested the middle-class-first plan is a “tax hike,” despite the fact that everyone would actually get a tax cut.

It should set up a compelling political fight (which would have been smarter before the election): Dems fighting for the middle class, while Republicans fight for the rich. Indeed, Dems fighting for permanent middle-class tax cuts, which also help the wealthy, while Republicans hold the whole package hostage until the rich get more.

It’s not every day the two parties’ approaches to government get spelled out so clearly.