Thursday, August 02, 2018

And Yet More Tax Relief For The Very Rich?

It still shocks me (though it shouldn't) how blatantly the Republican Party caters for the very wealthiest among us.  The Trump Reich has already lowered taxes for the super-wealthy (and thereby further increased the income inequality in this country).  Now the administration is trying to relieve that terrible tax burden* of the very rich even more:

Rep. Devin Nunes (R-Calif.) this week introduced legislation that would reduce the amount people pay in capital gains taxes, as conservatives press the Treasury Department to take action on the topic.
The bill from Nunes, a senior member of the tax-writing House Ways and Means Committee, would index capital gains to inflation. He argues that the measure would build off the tax-cut law President Trump signed last year and incentivize investment.
“This bill will continue the tax-cutting trend that began with the tax relief bill last year,” Nunes said in a statement Friday. “This is a common-sense reform that will remove an unjust tax, contribute to economic growth, and help both large and small investors keep more of their own money.”

The bolds are mine.

Note the word "relief" and "tax-cutting" and that silly reference to "small investors."  The truth is that capital gains almost completely accrue to the wealthy:

By dollars, more than 75% of capital gains tax are paid by taxpayers reporting income over $1,000,000. Just over 1% of capital gains taxes are paid by taxpayers reporting income of $100,000 or less. “Therefore,” writes Burman, “the most well-off would reap the largest benefits from a policy change to index the basis of capital assets.”

So what is the "common sense" Nunes sees in this reform?  Probably the idea that people shouldn't be taxed on that part of their capital gains which are due to nothing but inflation.  His bill would index capital gains to inflation.

That's common sense, right.  So how about doing the same when taxing interest income, dividends, earned income and so on?  All those, after all, can also be affected by inflation.

Likewise, if we want coherent government policies about taking inflation into account, why don't we index-link the countable assets thresholds** for those seeking Supplementary Security Income (SSI)?  This was suggested in a letter to the editor in the New York Times

And, indeed, my own check of the letter-writer's information showed that the countable asset thresholds were the same in 1989 as they are in 2018 ($2000 for an individual and $3000 for a couple).  Clearly, those thresholds should be index-linked, too, if capital gains are.

What about the contribution to economic growth Nunes sees in his proposal to index-link capital gains?  Well, at least one study suggests that the effects would be at most minor.

Sigh. All this is happening behind the curtain while on the stage capers the clown prince of this country, one Donald Trump.

*  It's as if the Republican Party is a nurse doing triage at a hospital Emergency Room, and that nurse always prioritizes rich people's slight colds or zits over poorer people's strokes or heart attacks or broken bones.  Real nurses don't do that, but then they are not paid by the Koch and Mercer families for services rendered.

If you want to get why I am angry at all the tax-relief jargon, well, this is why.

** This site explains what these assets are.  For someone to qualify for SSI, that person's countable assets must not exceed the threshold value.