Bipartisan Commission's budget proposal

Originally posted by telerion
Neither really. That's been my point from the get go. Although I would say that your modifier "mildly" is ambiguous.

I've also pointed out that the S-B proposals are moves toward more progressivity. You disputed that. I've cited tax experts, one from academia and another from a non-partisan tax policy think tank, who agree. You are so focused on t ...[text shortened]... making the SS system more progressive)

3) Reducing marginal tax rates for everybody else

I want to the TaxPolicy Center website and they have two charts detailing the effect on the income quintiles of the Simpson-Bowles proposals one assuming the Bush tax cuts are all extended, one assuming they are not and both assuming that the EIC and Child Care Credit are retained. http://www.taxpolicycenter.org/taxtopics/bowles-simpson.cfm

The reports are T10-0251 and T10-0252. To my obviously inferior intellect, they show that those in the lower quintiles will have a greater percentage increase in taxes than those in the higher quintiles. Thus, even assuming the EIC and CCC is retained the proposals reduce progressivity.

Originally posted by no1marauder
I was talking about letting all the Bush tax cuts expire, not the Obama proposal. My understanding is that would reduce the deficit more than the Simpson-Bowles proposal.

I am aware of the proposal to treat capital gains and dividend income as ordinary income; as I've already mentioned the increase of a max 15% to a max 23% would be mor ...[text shortened]... The net effect would be that the average wealthy taxpayer would paid less, not more, in taxes.

But the average wealthy taxpayer paying less in taxes than before does not imply that a tax code is less progressive. To judge that you have to look at how much he pays relative to other people in the economy. As an extreme example, if you reduce a rich man's tax obligation by one dollar and everybody else's obligation to zero then the system has become more progressive not less.

In this case, the latest estimate from the Tax Policy Center (which I linked to earlier) is that on net the S-B "zero-plan" is a tax increase (as the article points out, Krugman claimed this). Overall, the incomes of the rich are reduced by the largest fraction, and the reduction size shrinks as you move down the income distribution.

Originally posted by telerion
But the average wealthy taxpayer paying less in taxes than before does not imply that a tax code is less progressive. To judge that you have to look at how much he pays relative to other people in the economy. As an extreme example, if you reduce a rich man's tax obligation by one dollar and everybody else's obligation to zero then the system has become m ...[text shortened]... e largest fraction, and the reduction size shrinks as you move down the income distribution.

I'm looking at Table T10-0252. It says the average tax increase for the lowest quintile will be 39.2% and for the second quintile 27.0%. This is even with the assumption that the EIC and CCC are retained. The increase for the other quintiles ranges from 7.7% to 10.6%. In addition, it states that the share of federal taxes paid by the top quintile will decrease by .5% and that of the fourth quintile will fall by .4%.

How does any of that equal increases in "progressivity"?

Originally posted by no1marauder
I want to the TaxPolicy Center website and they have two charts detailing the effect on the income quintiles of the Simpson-Bowles proposals one assuming the Bush tax cuts are all extended, one assuming they are not and both assuming that the EIC and Child Care Credit are retained. http://www.taxpolicycenter.org/taxtopics/bowles-simpson.cfm

...[text shortened]... r quintiles. Thus, even assuming the EIC and CCC is retained the proposals reduce progressivity.

They explain it in the discussion of distribution results.

"The estimates differ greatly between the two baselines. If the tax expenditure provisions affect only income taxes, not payroll taxes, the Chairmen’s Mark would reduce after-tax income relative to current policy by about 2 or 3 percentage points, on average, in all quintiles in the income distribution (somewhat more in the second and top quintile and less in the others). But the largest drop in after-tax income would occur for taxpayers in the top 1 percent, and especially the top 0.1 percent, of the income distribution, making the tax system more progressive at the very high end. In contrast, when compared with current law, the Chairmen’s Mark would reduce after-tax income in the bottom two quintiles of the income distribution and would raise after-tax income in the top three quintiles, making the system on average less progressive. The difference between the two estimates reflects the relatively large benefits that the top fifth of taxpayers received from the 2001 and 2003 tax cuts and would receive from extension of the AMT patch."

Basically, you get a regressive result if you compare their proposal to the case of Bush tax cut expiration and extension of AMT so that at least is a preliminary answer to your earlier question.

In reality, the Bush tax cuts will be extended, at least for every household making under $250,000. Sounds like that scenario would eliminate the regressive findings.