by Gerald E. Scorse / October 31st, 2017
On September 27th, media reports outlined the tax plan hammered out in secret by the GOP’s so-called Big Six. The morning of the 28th, the writer Stephen King tweeted his scorn: “Same old same old. The fat man’s busy dancing while the poor man pays the band.”
The poor man doesn’t really pay the band, but there’s plenty of reason to second King’s emotion.
The proposals reaffirm the Republican obsession with shoving more money into the pockets of people whose pockets are already bulging. The haves, and only the haves, would reap billions by repealing the alternative minimum tax and the estate tax. More would go in the same direction by taxing the income of pass-through businesses at 25 percent.
Worst of all, the proposals make not even a gesture toward eliminating the biggest single contributor to income inequality in America: lower taxes on income from wealth than income from work. Income made sitting by the side of the pool (capital gains and dividends) gets taxed at a lower rate than income from wages. For taxpayers in the top bracket, the preferential rate amounts to a break of roughly 40 percent (23.8 percent on investment income vs. the top marginal rate of 39.6 percent on ordinary income). The tax break for the everyday well-off is even greater, 15 percent vs. 28 percent, a savings of over 46 percent.
Candidate Trump promised a big gesture, ending the carried interest loophole that lets hedge fund…