Paul Ryan, the Republican candidate for vice president, says he wants to scuttle the tax breaks of America’s rich, but he also proposes expanding one of the biggest breaks enjoyed by the wealthiest – the low tax rate on investment income.
Ryan, Mitt Romney’s running mate, last week hinted at how their ticket would revamp the tax code starting in 2013. He vowed to unveil details only after the November 6 elections…
Wealthier Americans generally trim their taxes in two big ways. One is through tax deductions such as those for charitable donations. The other, a lower tax rate on investment income than on wages, favors the rich because they have more investment income than taxpayers further down the income ladder whose salaries make up the bulk of their income.
The wealthier also reap a bigger benefit because their steeper marginal income tax rates mean that a lower rate on investment income translates into a bigger discount…
“When I look for tax advantages enjoyed by very high-income people, everything else pales in comparison to the favorable treatment of their capital gains and dividends,” said Clint Stretch, former counsel at the congressional Joint Committee on Taxation.
The top 1 percent of taxpayers derive 35 percent of their income from investments, while the poorest 20 percent derive about 2 percent of their total income from capital investments, according to the nonpartisan Tax Policy Center.
If you expect someone like Paul Ryan or Mitt Romney to move into your neighborhood, you might be one of those folks who doesn’t care for tax reform. The rest of us are still in favor of progressive income tax structures and want to see an end to offshore escape roads.
We may not be Greece, yet — Wall Street’s not entirely in charge of our country’s economy. But, we’re damned close to being Italy with all the ways and means available for the rich to slip their money out of the country.