Tuesday, September 13, 2011
(book by Mark Zepzauer and Arthur Naiman)
Advocates for shrinking, if not entirely eliminating, the tax on capital gains insist such a move is good for the economy, summing up their position with the slogan “Capital Gains=Better Jobs.”
But for many on the left, the message could be: “Capital Gains Tax Cuts=Welfare for the Rich.”
Capital gains are the profits won by the sale of such non-tangible assets as stocks, bonds and property. According to Steven Mufson and Jia Lynn Yang, writing in The Washington Post, “Over the past 20 years, more than 80 percent of the capital gains income realized in the United States has gone to 5 percent of the people; about half of all the capital gains have gone to the wealthiest 0.1 percent.”
Over the past two decades, Washington has cut the rate on capital gains, first under President Bill Clinton and then under President George W. Bush. It’s now to the point where the richest Americans pay only 15% on long-term investments, while anyone in the middle class earning more than $34,500 a year is paying a higher rate.
With the U.S. Treasury in need of more revenues to help balance the budget, some lawmakers are pushing to increase the rates on capital gains. “This is something that should be on the table,” Representative Chris Van Hollen (D-Maryland), one of 12 members on the congressional “supercommittee” tasked with reducing the deficit, told The Washington Post. “There’s no strong economic rationale for the huge gap that exists now between the rate for wages and the rate for capital gains.”
President Barack Obama prefers the capital gains cut implemented by his predecessor be allowed to expire, which would raise the rate back up to 20% (which would still put it below what it was under President Ronald Reagan).
Many Republicans insist the rate needs to go down, not up, in order to encourage economic investment. In fact, five of the GOP candidates for president (Jon Huntsman, Michele Bachmann, Ron Paul, Herman Cain and Newt Gingrich) want to do away with the tax altogether.
One of America’s most famous billionaires disagrees, arguing his cohort should be paying higher taxes. “The truth is, I have never had it so good in terms of taxes,” Warren Buffett said in an interview with Charlie Rose. “I am paying the lowest tax rate that I’ve ever paid in my life. Now that’s crazy, you know. And if you look at Forbes 400, they are paying a lower rate, counting payroll taxes, than their secretary or whomever around their office, on average.”
-Noel Brinkerhoff
Capital Gains Tax Rates Benefiting Wealthy Feed Growing Gap Between Rich and Poor (by Steven Mufson and Jia Lynn Yang, Washington Post)
Five GOP Presidential Candidates Have Proposed Eliminating Capital Gains Tax, a $1 Trillion Giveaway to the Rich (by Pat Garofalo, Think Progress)
10 Years of Capital Gains Tax Cuts Proves: Rich Win, You Lose (by Dave Johnson, Campaign for Our Future)
Taxing the Top 25 Hedge Fund Managers Like Average Citizens Would Cut Deficit by $44 Billion (by Noel Brinkerhoff, AllGov)
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