Joint Economic Committee ranking member Rep. Jim Saxton (R-NJ) wants us to know what a soul-crushing burden of taxes the richest one percent of income earners shoulder.

The share of federal income taxes paid by the top 1 percent of households ranked by income increased from 36.5 percent in 2000 to 38.8 percent in 2005, recent Congressional Budget Office (CBO) data show.

...

"Despite the contention that the tax cuts would unfairly reduce the tax burden of the rich, their share of taxes has in fact gone up," Saxton concluded.

But that very same data set contains this interesting inconvenient factoid that Jim "Defender of the Richest Among Us" Saxton omits:

From 2000 to 2005, the effective income tax rate for the top 1 percent of income earners fell 4.8 percentage points (pp) from 24.2 percent to 19.4 percent.

In fact, this drop is larger than the average for all income groups (2.8 pp) and more than double the drop for middle income groups (second through fourth quintiles, which saw an average 2.2 pp drop.)

The Senate has officially gone over the the bad place. Three out of the first seven amendments to the FY 2009 budget resolution propose to make costly changes to the estate tax. While only one of them was adopted, unfortunately the breakdown of the votes showed less support for a rational, fiscally responsible reform to the estate tax.

Here's a quick summary of the amendments:

• Sen. Max Baucus' (D-MT) amendment to use projected surpluses in 2012 and 2013 to extend popular middle-class tax cuts and make changes to the estate tax by extending the 2009 levels ($7 million exemption for a couple, 45 percent marginal rate) passed overwhelmingly 99 - 1.
• Sen. Ken Salazar (D-CO) offered an amendment that would have likely increased the exemptions for the estate tax to $10 million per couple and drop the marginal tax rate to 35 percent. This amendment failed 38-62, but garnered 15 more votes from Democrats who, quite frankly, should know better, than it did last year when a simliar amendment was offered by Sen. Ben Nelson (D-NE), which received 25 votes.
• Sen. Jon Kyl (R-AZ) offered an amendment that would make similar changes in the exemption levels and marginal tax rates as Salazar's amendment, but would not offset the tremendous cost of such an amendment - likely around $750 billion over the next ten years according to the Joint Committee on Taxation. Kyl's amendment failed by a 50-50 vote.

The opening salvo in the Senate budget resolution amendment process will be fired in the next hour or two, when Finance Committee Chair Sen. Max Baucus (D-MT) offers the first amendment in this year's round. The Baucus amendment creates room in the budget numbers to extend some of the temporary 2001 and 2003 tax cuts dealing with

• the marriage penalty
• the child tax credit
• the 10 percent tax bracket
• the estate tax (understood to mean extending the 2009 levels, with indexation)

The amendment is paid for by reducing projected surpluses in 2012 and 2013. Separate legislation would be needed later to actually extend the tax cuts. A similar amendment by Baucus passed 97-1 vote last year and is likely to fare about as well this time.

The strategy behind the amendment -- give Democrats, moderates or those in red states, an inoculation against GOP or conservative criticism that they don't support popular (e.g., estate) tax cuts. Maybe it works -- you can have your inoculation cake without being tarred as a gluttonous spendthrift blasting holes in the deficit since

1) under the budget resolution, you can use the semi-fictitious deficits projected for 2012 and 2013 to pay for it

2) the budget resolution is just a resolution -- you're not stuck with law and consequences at the end of the day

Once again, the claim is heard that the budget resolution calls for "the largest tax increase in history." And it is as false a claim as ever.

Current law calls for the Bush tax cuts of 2001 and 2003 to expire in 2010. Under the law, the tax rates that prevailed prior to those years will be restored, resulting in a tax increase, which by some measure would be the largest in history.

Must we assign blame? OK, then. The Bush administration wrote that tax law, mandating the 2010 expiration -- and the resulting tax increase thereafter. Congress, controlled by the GOP at the time, passed that law. It was signed by President Bush. In all the years since then -- when, except for this past year, they controlled Congress -- the GOP failed to do anything about the impending increase.

Blaming anyone for assuming current tax law will remain current tax law in estimating projected revenues -- let alone saying that such an assumption amounts to proposing the largest tax increase in history -- is akin to blaming the weatherman who reports that it is currently (as of this writing) raining outside and recommends that people carry umbrellas with them.

Oddly, however, Messrs. Paul Ryan (R-WI) and Jugg Gregg (R-NH) persist in blaming the Democrats for this state of affairs, when they had ample opportunity to do something about it. It is misleading, tiresome, and as irresponsible to suggest this as it was to propose this tax policy in the first place.

Senate Budget Resolution:

No reconciliation instructions included.

House Budget Resolution:

Instructs the House Ways & Means Committee to...

• produce a paid-for AMT fix -- at a $70.3 billion cost in FY09 by July 15, a date designed to avoid the delays in processing tax refunds threatened in last year's debate
• delay a scheduled 10 percent cut in Medicare physician payments scheduled to go into effect July 1, perhaps by cutting subsidies to private insurers under the Medicare Advantage program
• produce a reconciliation bill that would reduce the deficit by $750 million over five years

Getting Bush's veto-threats out early, OMB Director Nussle promises Bush will veto...well pretty much anything that wasn't written by the president.

OMB Director Nussle today sent what officials are billing as the first of its kind, a pre-emptive letter to the House and Senate Budget and Appropriations committees outlining veto threats over Democratic spending and tax policies -- before their budgets have been unveiled....Nussle's letter states that President Bush will veto FY09 appropriations bills that exceed his overall spending target and do not meet his mandate to cut the number and cost of earmarks in half from what was enacted for FY08....[and] reiterated the president will "veto any attempt to increase taxes."

Still, you gotta hand it to him. Nussle is nothing if not a go-getter.

A new report out from the Center on Budget and Policy Priorities last Friday explores the use of economic stimulus packages (i.e. tax cuts) at the state level, which have been proposed in seven states. CBPP concludes tax cuts are not an effective economic stimulus at the state level, and may in fact hurt state economies. From the report:

Policymakers in many states are proposing tax cuts or rebates that they hope will "stimulate" their state economies, often citing the federal stimulus bill as both a model and a reason to support such a plan. Leaders have issued such proposals in Alabama, Arizona, Connecticut, Florida, Illinois, Pennsylvania, and Wisconsin, among others. But state tax cuts would do little or nothing to boost a state's economy. In fact, they reflect a misunderstanding of how state governments can best respond to a recession.

The report outlines six recommendations for actions states can take to boost their economies.

CBPP: FISCAL STIMULUS AT THE STATE LEVEL