Campaign officials said that “among the measures being considered are tax cuts – perhaps temporary – for capital gains and dividends.”
But if these are indeed the proposals that McCain makes, then he will, once again, have to explain why his economic plan is geared disproportionally towards the wealthy, as cutting capital gains and dividends taxes does nothing for the middle class.
As the Wonk Room has previously noted, most capital gains flow to millionaires. Families making more than $1 million collect 59% of capital gains, while families making less than $50,000 collect 2.5%.
Furthermore, as the Tax Policy Center has shown, under the current capital gains and dividends rate, 98.3% of the benefits go to the top 20% of taxpayers. The other 80% of taxpayers see only 1.7% of the benefits of today’s rate. 93.9% of the benefits go to the top 5%, and 84.8% to the 1%.
Brad DeLong spotted the problems with McCain’s proposals, saying that “the middle class doesn’t collect capital gains, or dividends, in any material amount. Indeed, that’s what makes you middle class–that even though you have a fair or a good income you work for it.”
McCain has already made it abundantly clear that he plans to craft his economic proposals around aiding the wealthy, corporations, and bankers who made bad loans. In that light, these new proposals would actually fit in rather well.