McCain’s plan to save the economy: tax cuts for the top 3%
September 26th, 2008At the bipartisan meeting at the Whitehouse to discuss the economic bailout package, McCain reportedly contributed nothing to the conversation other than throwing out this brilliant idea:
Towards the end, McCain finally spoke up, mentioning a counter-proposal that had been offered by some conservative House Republicans, which would suspend the capital gains tax for two years and provide tax incentives to encourage firms that buy up bad debt. McCain did not discuss specifics of the plan, though, and was non-committal about supporting it.
Tax cuts! And not just tax cuts, but tax cuts for the richest of the rich. Let’s ask the Tax Policy Center Who Pays Capital Gains Tax?
Assuming that everyone pays the 15% capital gains rate (very, very little of the tax is paid by folks at the 0%/5% rate), this chart shows that 83% of this cut will go directly to the pockets of the top 3% of taxpayers. And, as far as I can tell, there’s no requirement that investors benefitting from this windfall invest in the United States, so it won’t even directly help American growth.
On top of the basic unfairness of a plan that McCain’s apparently seriously considering, the effects on Federal revenue would be disasterous. Without this plan in effect, the government would receive between $200 and $300 billion in revenues from capital gains taxes over the next two years. With the plan in effect, it will receive $0 in revenues, and smart investors will undoubtedly cash out post haste to realize gains within the two-year window. That means less capital gains revenue than expected once the two-year law sunsets and the pressure to sell during the window will probably lead to unnaturally low prices.
Yes, McCain, let’s seriously consider Rep. Cantor’s retarded idea for a few days so that you can bail on a debate.