WASHINGTON — Louisiana residents who are making at least $200,000 in adjusted gross income represent 2.3 percent of the state and account for 45 percent of the income taxes paid, according to a report released Tuesday by the nonprofit Tax Foundation, of Washington, D.C.
The “Tax Cut Expiration Would Impact States Unevenly” report is intended to show the varying effects in states of President Barack Obama’s proposal to extend income tax cuts to American households making less than $250,000 a year, while allowing the tax breaks to expire for the nation’s wealthiest.
Republicans also seized on a business-funded study from Ernst & Young also released Tuesday that contends Obama’s plan would increase unemployment and result in the loss of roughly 710,000 jobs “in the long-run” by affecting some small businesses.
White House Deputy Press Secretary Amy Brundage responded that the Ernst & Young report is a biased industry study put together by a former Bush appointee that makes fallacious assumptions.
“The truth is that the Congressional Budget Office, the Joint Committee on Taxation, and other independent analysis have found that letting tax cuts expire and using the resulting revenue for deficit reduction would help the economy over the long-run because it would lead to lower interest rates and higher investment — the opposite of what the industry-financed study concludes,” Brundage wrote in an email.
According to the Tax Foundation report, the U.S. average is that 3 percent of the population makes more than $200,000 in adjusted income and pays 50 percent of all personal income taxes. Some of the more “blue” places like Connecticut, New York, Massachusetts, Washington, D.C., and California would have the most residents affected by Obama’s plan, the report states.
Republicans want to extend all the Bush and Obama-era tax breaks, while Democrats are pushing for the $250,000 threshold on families and $200,000 for individuals. Those making more than $200,000 currently receive the most tax breaks.
The U.S. Senate next week could move on Obama’s plan, while the U.S. House intends to vote on legislation to extend all the tax cuts before the August congressional break.
The tax cuts are set to expire at the end of the year unless Congress acts.
Some Democrats have expressed a preference for a $1 million income cut off in the past, instead of $250,000. Only 0.15 percent of Louisiana taxpayers report income over $1 million, but they account for nearly 20 percent of the income taxes, the report states.
U.S. Rep. Bill Cassidy, R-Baton Rouge, said he would rather support “growth” than Obama’s idea of “fairness” that Cassidy said only works well on the campaign trail.
“My gosh, those people … they’re the entrepreneurs and the job creators,” Cassidy said. The options are to make them pay more taxes or give them the leeway to further expand their businesses, Cassidy added.
U.S. Sen. Mary Landrieu, D-La., is backing Obama’s plan, although she has left the door open for her to support increasing the $250,000 threshold in the future.
Her office reiterated her previous statement on the matter.
“With the economy still recovering, this is not the time to raise taxes on middle class families,” Landrieu stated. “I support efforts to extend the current tax rates for the 98 percent of Louisianians who earn less than $250,000 per year.
“At the same time, extending tax cuts for the middle class will also protect 97 percent of America’s small business owners who earn less than $250,000 per year. If we can afford to do more, given the fiscal pressures on our budget, we will make every effort.”
Others, like U.S. Sen. David Vitter, R-La., seized more strongly on the Ernst & Young report that was funded by a variety of business groups like the United States Chamber of Commerce, the National Federation of Independent Business and the S Corporation Association. The report focuses on the portion of small businesses that could be affected in income, capital gains and Medicare tax rates.
“This would be the single biggest tax increase in U.S. history — $850 billion — with much of that on the backs of small businesses which pay through the individual rate,” Vitter said in a statement. “Obama said we shouldn’t do that in late 2010 because the economy was so weak; yet growth is weaker now than then — 2 percent compared to 3.2 percent.”
U.S. Rep. Steve Scalise, R-Jefferson, said, “President Obama would rather play politics than address the high unemployment by pitting one group of Americans against the other as he calls for billions in job-killing taxes in order to continue his failed practice of more wasteful Washington spending.”
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