Don't relent on raising cap gains for those earning over $250K; top .1% earn half of all cap gains!
Last edited Mon Dec 31, 2012, 12:22 PM - Edit history (1)
Capital gains are the key ingredient of income disparity in the US– and the force behind the winner takes all mantra of our economic system. If you want even out earning power in the U.S, you have to raise the 15% capital gains tax.
Income and wealth disparities become even more absurd if we look at the top 0.1% of the nation’s earners– rather than the more common 1%. The top 0.1%– about 315,000 individuals out of 315 million– are making about half of all capital gains on the sale of shares or property after 1 year; and these capital gains make up 60% of the income made by the Forbes 400.
It’s crystal clear that the Bush tax reduction on capital gains and dividend income in 2003 was the cutting edge policy that has created the immense increase in net worth of corporate executives, Wall St. professionals and other entrepreneurs.
The reduction in the tax from 20% to 15% continued the step-by-step tradition of cutting this tax to create more wealth. It had first been reduced from 35% in 1978 at a time of stock market and economic stagnation to 28% . Again , in 1981, at the start of the Reagan era, it was reduced again to 20%– raised back to 28% in 1987, on the eve of the October 19 th– 23% crash in the market. In 1997 Clinton agreed to reduce it back to 20%, which move was an inducement for the explosion in the formation of multi-billion dollar hedge funds and private equity firms– the most “rapidly rising cohort within the top 1 per cent, according to a recent paper by Laura D’Andrea Tyson, Univ. of California economist.”
Make no mistake; the battle that is to be fought over the coming attempt to reverse this reduction in capital gains will be bloody and intense. The facts are clear according to the Congressional Budget Office; more than 80% of the increase in income inequality the past several years was the result of an increase in the share of household income from capital gains. In fact, you can go so far as to claim that “Capital Gains income is the most unevenly distributed– and volatile– source of household income,” according to Laura D’Andrea Tyson, University of California business professor and former chairwoman of the Council of Economic Advisers under President Clinton.
more...
http://www.forbes.com/sites/robertlenzner/2011/11/20/the-top-0-1-of-the-nation-earn-half-of-all-capital-gains/
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Raising capital gains for those with incomes over $250,000 is indeed important for the fairness of the deal being discussed on revenues. It essentially offsets much of the move from $250,000-$400,000 on rates, while drawing that additional revenue only from the most non-productive and wealthy populations (dividend-takers at very high income levels).
The tax rate level will allow the GOP to save face ("We moved Obama from $250,000 to $450,000!"
, but the capital gains increase for top incomes cuts that in half - at least - revenue-wise, and may cancel it completely. If the Dems get $450,000 and a 20% capital gains on over $250,000, that will be a significant victory on revenues, even though the usual suspects will be screaming "Cave!" on the $250,000. Ultimately, philosophically and policy-wise, getting that capital gains rate moving upwards will be a massive progressive reversal of 30 years of losses. It's a shame it will probably go unrecognized by people desperate to attack the President.
