Two-Thirds Of The Benefits From McCain’s New Tax Cut Go To Millionaires
Two-Thirds Of The Benefits From McCain’s New Tax Cut Go To Millionaires
As part of his new economic outline – The Pension and Family Security Plan – Sen. John McCain (R-AZ) has proposed cutting the tax rate on long term capital gains and dividends to 7.5 percent in 2009 and 2010. The current tax rate for these capital gains is 15 percent.
Today, the non-partisan Tax Policy Center (TPC) released an analysis showing who would benefit from this cut. Like the rest of McCain’s tax cuts, this one overwhelmingly aids the wealthy, with two-thirds of the benefit going to those making over $1 million:
In 2009, under a plan that lowers taxes on both gains and dividends, those making $1 million or more would get two-thirds of the benefit, and an average tax cut of more than $72,000. Those making less than $50,000 would get, on average, nothing.
As the TPC pointed out, “75% of the benefit of low taxes on capital gains and dividends already go to those making $600,000 or more. Half goes to those making $2.8 million or more.”
In fact, as the Wonk Room noted when McCain first toyed with including this provision in his economic plan, under the current 15 percent rate, 93.9 percent of the benefits go to the top 5 percent of taxpayers, and 84.8 percent to the top 1 percent. The other 80 percent of taxpayers see only 1.7 percent of the benefits of today’s rate.
The McCain campaign claims that the cut will “strengthen incentives to save, invest, and restore the liquidity of markets.” But given the current economic situation – one in which “people do not have an awful lot of capital gains” – this measure will do nothing to stimulate the economy.
Furthermore, The Street noted that McCain’s cut “might have unintended consequences,” like encouraging investors “to make one-time sales to capture lower capital gains and increased tax write-offs,” which “would facilitate capital flight.”
Cross-posted on The Wonk Room.
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McCain just cannot relate to middle class America.
October 15th, 2008 at 11:30 amYou know, with all the pundits, talking heads and even anchors (even Obama!) saying that, given the current market situation, there are no capital gains to tax, I’d counter that, yes, if one had the money and knowledge to “play” the market, one could have made some serious money in the past few weeks.
There is plenty of money to be made in a bear market and in a volatile market. Options trading and day trading can be huge.
So, yes, there are capital gains to tax THIS YEAR, especially when you consider the 9 months leading up to the sharp decline.
PEACE
October 15th, 2008 at 11:32 amAnd this comes as a surprise to someone? Oh, yeah, to Rush and Fixed News. They didn’t get the talking points memo on it yet.
October 15th, 2008 at 11:32 amAnd a big beneficiary of John McCain’s tax plan would be ****** drum roll ****** none other than John McCain himself.
October 15th, 2008 at 11:33 amWho Lied Today? Says:
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McCain just cannot relate to middle class America.
He thinks millionaires are the middle class, and those who make under $50,000 are the invisible class.
October 15th, 2008 at 11:34 amIn McCain’s world, there is no middle class…
there is only ‘us’ and ‘them’
McCain strives to take care of ‘us’ while neglecting to even throw a bone at ‘them’, and never realizes that ‘them’ is the majority of Americans.
October 15th, 2008 at 11:36 amWhat do you expect. His wife is rich, his friends are rich, his past and present policies have been geared to the rich, his parties policies are for the rich, so it stands to reason that his new tax cuts would benefit the rich.
October 15th, 2008 at 11:38 amOnly 2/3 of the tax cut for millionaires? The old guy is slipping by leaving 1/3 on the table for the have-lesses.
October 15th, 2008 at 11:46 amJohn McCain’s tax-cutting philosophy remains consistent: when the going gets tough, the rich get richer.
For the details, see:
October 15th, 2008 at 11:51 am“McCain’s New, New Plan: The Rich Get Richer.”
McCain’s plans to get our economy moving again overwhelmingly aids the wealthy, with two-thirds of the benefit going to those making over $1 million. And those making less than $50,000 would get, on average, nothing.
This has been Republican policy for the last 30 years and, judging by the current state of our economy, it hasn’t worked out so well.
This should be the final nail in the coffin of the fantasy that a McSame presidency would bring about ANY real change.
October 15th, 2008 at 11:54 amWell, he knows who supports the Fascist Repukian Mafia, HeeHaws, Hate Mongers, Bigots, LIVs, and Millionaires.
But he is gonna lose so badly, soooo badly.
By the way Cheney is having heart trouble is in the hospital, now I have never really wished for a vicious death on anyone, but this WAR CRIMINAL deserves it, if any one does.
October 15th, 2008 at 11:55 amJust more of the same supply-side, trickle-down economic theories that don’t work. Further proof that McSame is a “maverick” in name only.
October 15th, 2008 at 11:58 amOnce again GRAMPY MCWARS shows just how out of touch he is with 95% of us who just don`t matter…..Until November 4th when we all show up to vote and put and end to class warfare and REICH wing dogma.
October 15th, 2008 at 12:04 pmSame base as Bush. McIIIrd.
October 15th, 2008 at 12:08 pmAnd where would those taxcuts that millionaires get, go? Why, into the growing capital markets off-shore. That’s why a targeted tax reduction to the bottom 95% makes so much more sense…they will spend it in our economy.
October 15th, 2008 at 12:09 pmWell, he had to come out with something!
What did you expect?
October 15th, 2008 at 12:10 pmOkay, so it’s a tax cut for middle-class multi-millionaires. The good news: it’s meaningless. Even on the off-chance Obama caves and admits in tonight’s debate he belongs to a secret terrorist cell, the Democratic Congress won’t pass this kind of gift for those who have everything. This story is linked on RealityChex.com at http://www.realitychex.com along with many other stories & opinion pieces, mostly about the presidential race.
October 15th, 2008 at 12:12 pmIf they ever were “unintended” consequences ( a dubious assertion at best), once those consequences have been recognized, they can no longer be described as ‘unintended,’ can they?
October 15th, 2008 at 12:14 pmI for one am thrilled that my world view won’t being changed by this ordinary turn of ‘events’– for a second there I was afraid my faith in McCain was going to be existentially challenged!
Phew!
October 15th, 2008 at 12:18 pmBTW… The “Pension and Family Security Plan” sounds a lot like one of Luntz’s marketing efforts.
Never mind what;s in the box, just look at the shiny wrapper!
October 15th, 2008 at 12:21 pmIn a few short months, I have grown to hate JM and SP as mcuh as W and DC.
October 15th, 2008 at 12:32 pmThe McCain/Gramm/Holtz-Eakin socioeconomic scale:
Rich: $2 billion plus
October 15th, 2008 at 12:35 pmSuccessful: $500 million to $2 billion
Middle Class: $100 million to $500 million
Comfortable: $10 million to $100 million
Working Class: $1 million to $10 million
He’ll promise anything to Cindy for Viagra sex. Oh Pew. Sometimes I gross myself out.
October 15th, 2008 at 12:35 pmmisshusseinmolly Says:
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Just more of the same supply-side, trickle-down economic theories that don’t work. Further proof that McSame is a “maverick” in name only.
No, you see, John McCain is such a Maverick that he will not be swayed by the fact that 28 years of his economic policy has destroyed the economy.
October 15th, 2008 at 12:36 pmWhen are we going to see a serious, grounded rebuttal to the theory of supply-side economics?
This post-1980 fetish with finance seems to have produced something akin to “Dutch Disease,” with capital concentrating on speculative investment at the expense of investment in manufacturing and industry. We rode a strong dollar and easy credit to a huge trade imbalance, with non-tradable services offering a refuge for American workers.
A “service economy” dominated by the retailing of imported products is not sustainable, and neither are laws and economic instruments that emphasize financial speculation over real investment.
October 15th, 2008 at 12:37 pmOnly two thirds? You must be kidding! And what would that come to per capita?
October 15th, 2008 at 12:45 pmIntrade Real Time Quotes Obama 82.4% ~ McCain 19.7%
October 15th, 2008 at 12:47 pmIt’s shocking how these Uber Rich Republicans love so much Socialism for themselves. They’re all for Government bailouts and welfare.
October 15th, 2008 at 12:49 pmIt’s called Cronyism.
October 15th, 2008 at 1:05 pm.
It’s called, keeping the base happy.
.
October 15th, 2008 at 1:35 pmFurthermore, The Street noted that McCain’s cut “might have unintended consequences,” like encouraging investors “to make one-time sales to capture lower capital gains and increased tax write-offs,” which “would facilitate capital flight.”
Sounds like a Cheney idea.
October 15th, 2008 at 1:47 pmBarack needs to ask McCain just who McCain believes the “middle class” is.
After all, McCain thinks “the rich” are those making over $5 million.
October 15th, 2008 at 2:02 pmYes…there are plenty of people getting capital gains now. They are the wealthy, as they sell (and buy) stock within their investment portfolio. They pay taxes on those gains each year, even if they pull zero cash out of their account. Even those who are NOT multimillionares, but are living off the income from their investment portfolios, are paying only capital gains on any transaction. When they pull cash out of the account, they pay nothing further on it.
The only people who do NOT pay capital gains are those who have their investments in a tax-deferred account…either a retirement IRA or a 401K. When equities of any kind are sold, they get dumped into a core cash account. However, when the money is pulled out, the pay REGULAR tax (NOT the much lower capital gains tax).
Hence: a recap. McCain’s capital tax reduction idea does not target the general pool of middle class investors. Their investments are largely in tax-differed instruments (i.e., IRAs and 401K’s.) If McCain actually believes that this idea will benefit the middle class, then he knows even less about economics than just about anyone else I know.
October 15th, 2008 at 3:14 pmMcLame’s tax plan: Thousands of dollars for the rich, pennies for the unemployed. Imagine the savings from not taxing unemployment benefits – could probably allow you to fill up your tank once a month to try and find work.
October 15th, 2008 at 5:26 pmAccording to the Tax Policy Center, a joint venture between the Urban Institute and Brookings Institution, around 78 percent of the McCain tax cut would accrue to the top fifth of income earners, with almost 30 percent going to the highest 1 percent. This seems inequitable on its face, a point the Obama campaign and the press focus on.
We can argue whether the Obama plan is fairer or more economically efficient than the McCain plan, but only if we focus on the end product.
But can we conclude that the rich would pay too little taxes under the McCain plan? Not really, because most media reports do not reveal the resulting share of the tax burden borne by the highest earners.
As it happens, the top fifth of earners currently pay 67% of all federal taxes–including not just income taxes, but payroll taxes, corporate taxes and death taxes. The top 1% of earners pay 26% of all federal taxes.
The fact that high earners pay the vast majority of all federal taxes will come as a surprise to most Americans, who believe the middle class bears the tax burden while the rich get off scot free. A 2007 Gallup poll found that 66% of Americans believe upper-income people pay too little federal income taxes. Media reports play into these beliefs by focusing on how the candidates’ plans would change the tax code, not on what the tax code would look like after those changes took place.
Full article is here:
October 21st, 2008 at 9:33 pmhttp://www.aei.org/publications/filter.all,pubID.28746/pub_detail.asp
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