One
Tax Policy Americans Yugely Favor
By Gerald E. Scorse, Progressive Charlestown contributor
Nobody likes taxes, but
roughly nine out
of 10 Americans want income from investments to be taxed at least as much
as other income.
Republican leaders,
tone-deaf, push endlessly for investment breaks. They close their eyes to a
reform enacted under President Ronald Reagan: equal taxes on capital gains,
dividends, and ordinary income such as wages. It’s one policy the country would
love to have back, yugely.
The
nine-to-one margin came from a nationally representative sample of 1,040
individuals; they were polled in August in a broad-ranging tax survey conducted
by WalletHub, a personal finance website.
About
a third of the sample wanted higher taxes on investments, not just equal taxes.
WalletHub said there were “no significant differences by income or age…Across
all groups, there appears to be strong support for higher taxes on investment
income, relative to current policy.”
The landslide national
preference for at least equal taxes on investments—for tax fairness, not tax
breaks—meshes perfectly with the populist belief that the system is rigged in
favor of the rich. That’s who profits, grossly and disproportionately, from
preferential rates on investment income.
That’s more than alright
with Republicans, whose tax plans will likely drive those percentages even
higher—in exactly the opposite direction of the reform ushered in a generation
ago by President Reagan. He took Main Street’s side on taxing Wall Street
gains, but the GOP likes to pretend it never happened.
Example: the chairman of the
House Ways and Means Committee, Rep. Kevin Brady (R-TX), wrote an October op-ed
touting Reagan’s landmark Tax Reform Act of 1986. The piece urged Congress to
follow suit and pass “Reaganesque” reforms. Not too Reaganesque though; equal
taxes on investment income were a key element of that bill.
Preferential rates would
return under President Clinton and increase sharply under President George W.
Bush. President Obama did bump up the capital gains rate and add an Obamacare
surcharge for higher-income Americans—but even for them the levy is still far short
of the 39.6% top rate on earned income.
The current Republican
blueprint for tax reform, rolled out this summer by Chairman Brady and
House Speaker Paul Ryan (R-WI), taxes capital gains, dividends and interest at
half the rate of ordinary income.
For most Americans, the
final tax plan floated by president-elect Trump contained no investment
income changes (though he would, of course, repeal the Obamacare surcharge).
Both the blueprint and Trump’s plan call for eliminating the estate tax,
putting a golden cherry on top for the super-rich.
Proponents of lower taxes on
capital gains often claim that investors simply won’t invest without a
tax incentive.
The billionaire Warren Buffett, an investment guru, long ago dismantled
that argument:
“I have worked with investors for 60 years and I have yet to see anyone…shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and the potential taxes have never scared them off.”
The election results may
have stunned the pundits and the pollsters, but the signs were there from the
start. A populist anger had taken root in America, a lashing out by wounded
whites against a system they see as rigged against them. In this case, true:
there’s no clearer rigging than a tax code that favors investment income over wages
and salaries.
Donald Trump rode the
populist tide all the way to the White House. Let’s see if President Trump
listens to the populist yearning—the yuge populist yearning—for equal taxes on
income from wealth and income from work.
Gerald
E. Scorse helped pass the bill requiring basis reporting for capital gains. He
writes on taxes. Copyright 2016 Gerald E. Scorse. Reprinted by permission of
the author. This article also appeared in The
Hill on November 29.
