Progress: scammer Republicans are at least pretending to tax the rich
by David Atkins
Michael Hiltzik has a good take on the GOP's latest tax scam:
The long-awaited Republican tax reform plan was released today by House Ways and Means Committee Chairman Dave Camp (R-Mich). It's being hailed as a breakthrough in putting real reform on the table, but also being instantly eulogized as dead-on-arrival in a Congress that wants no part of any tax reform, now or ever.
Still, it's instructive to examine the Camp plan for a primer on the latest mathematical trickery aimed at making something that preserves, even enhances, tax benefits for the wealthy appear instead to be a tax increase for the wealthy. Nice try, Congressman Dave.
Here's the easiest calculation. Camp says he's eliminating the preferential tax rate on capital gains, and taxing them the same as ordinary income. That would be a big philosophical change and a big tax hike on the rich, if it were true.
It's not true.
Camp's plan exempts 40% of capital gains (and investment dividends) from any taxation at all. How does this work out in real numbers? The top marginal tax rate on married taxpayers today is 39.6% (couples with more than $457,600 income). The top capital gains rate is 20%.
Camp wants to cut the top marginal rate to 35%. If you tax capital gains at 35%, but exempt 40% of them from any tax, your effective rate on all capital gains works out to (... wait for i t...) 21%. In other words, Camp is raising the standard cap gains rate by a single percentage point. But since he's also cutting the top rate on all income by nearly five percentage points, rich taxpayers still come out ahead.
This is all typical Republican economic royalism and lying chicanery--except for one thing. They're actually trying to make it look like they're taxing wealth the same as work.
They know they're losing the argument. I pointed this out before in the context of the Right's shift from attacking Democrats as "socialist" to calling us "crony capitalists."
They know that Americans are upset about the preferential treatment of wealth over work. They know that if this is what capitalism looks like, more and more Americans want no part of it. They know they're losing. These sorts of desperate dodges and lies in the hope of acknowledging but avoiding reality are what a political party does when it's on the ropes.
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