Arkady
President
For years, a large majority of major politicians and commentators on the right (and in the self-proclaimed center) pretended to be deeply concerned about deficits, when that gave them an excuse to demand increasingly austere government budgets. Republicans forced government shutdowns over the issue, and op-ed writers pushed for reduction of social security benefits and savage cuts to the social safety net. Well, now we get to see if this was a genuine (albeit newly developed) principle, or simply a fig leaf for an anti-government agenda. Jeb Bush has debuted a tax plan that would cause gigantic increases in deficits, in order to further increase the wealth of the ruling class. Will the supposed deficit hawks speak out against it? Or will it be a flashback to the Bush and Reagan years, when deficits were treated as not mattering?
Bush's plan calls for reducing marginal tax rates. He has set this up to do nothing to provide tax relief to poorer workers, who are actually struggling to pay. The 10% bracket remains 10%. But for the rich, it'll be a monumental windfall: the 39.6% bracket goes down to 28%. Let's say you're Jeb Bush, and you brought in $7.4 million last year. This change would mean about $850,000 more in take-home pay. But, of course, you don't get something for nothing. That $850,000 has to come from somewhere else: higher payments from the less fortunate (either that amount today, or a whole lot more through the magic of debt with compound interest in the future), or else further cuts to spending. Keep in mind US spending is already the third-lowest of any developed nation on a per/GDP basis (behind only Mexico and Chile, which barely even qualify as developed nations).
That's not the only aristocracy-favoring change Bush embedded in his plan. When you come from old, old money like the Bush's, your real constituency are people with family compounds and second yachts. So, instead of the mortgage interest rate deduction being limited to the first $1 Million of debt, as currently, the tax value is capped at 2% of AGI, so that rich people's write offs can be higher than the write-offs of the middle class, even for a given amount of debt. If you earn $50,000, the maximum tax value of the mortgage interest deduction will be just $1,000 for you, but if, like Jeb!, you earned $7.4 million, go ahead and write off up to $148,000. Jeb! also eliminates the phase-outs for personal exemptions and itemized deductions, and eliminates personal AMT. These changes have absolutely no value for the majority of Americans, but they're a very big deal for the rich.
Jeb! also slashes the top corporate tax rate by 15 points. Keep in mind that US corporations already pay a below-average effective tax rate by the standards of the developed world generally, and they pay vastly less of the overall tax burden in this country than they did in our economic golden age. Corporate AMT is also eliminated, which not only makes it easier for well-represented corporations to dodge taxes entirely, but also increases the incentive for economically inefficient behavior corporations engage in merely to lower tax liability (with AMT, such tax-dodging measure reach a point of diminishing returns and companies stop bothering, but without AMT, there's no limit to how low you can go).
Jeb! also makes sure that rich folks who don't actually work for a living get a bonus in take home pay, relative to those who do something productive with their lives. If you're some snot-nosed trust-fund brat living off a portfolio, you get to pay just 20% on your capital gains, dividends, and interest. If you hire a professional, like a doctor, lawyer, or accountant, they could be paying up to 28% on their earnings, for the "sin" of having actually done something to deserve the money, but you get to coast by with just a 20% cut taken.
Jeb! also screws over small-time savers. The change to a 20% rate on interest may be a windfall to the rich, who previously paid at ordinary income rates, which were higher for them. But for the poor, it represents a tax hike. If you're some small-time saver just trying to build up a little cushion in a savings account, previously your interest might be taxed at just your 10% ordinary rate. Now, that'll be doubled, to help to finance that windfall for the rich.
Probably the most indefensible change, though, would be eliminating the estate tax. Already, even most multi-million-dollar estates are tax free: only if the net value of the estate is over $5.43 million is even a dime of it taxed. But, if you're sitting around waiting for Pappy to die so you can get your hands on part of the Bush family fortune, that cap probably seems much too low, so Jeb! want to get rid of estate taxes entirely. As a result, someone who earns many millions of dollars through his own genius and hard work will be heavily taxed, while someone who "earns" the exact same amount for sitting on his ass and having his name show up in the right will pays NOTHING. As with the reduction of investment tax rates, the principle here is clear: actual productive labor needs to be punished -- the less someone does to deserve his money, the more of that money he should get in take-home pay. The "little people" who actually make their way through hard work, are the ones who should support the country, not the children of the aristocracy. For someone like Bush, who was born into multi-generational wealth, that probably makes perfect sense.
It takes real effort to make Donald Trump look like he's not the dumbest, most vicious guy in a field of candidates. But Jeb! has done it.
Bush's plan calls for reducing marginal tax rates. He has set this up to do nothing to provide tax relief to poorer workers, who are actually struggling to pay. The 10% bracket remains 10%. But for the rich, it'll be a monumental windfall: the 39.6% bracket goes down to 28%. Let's say you're Jeb Bush, and you brought in $7.4 million last year. This change would mean about $850,000 more in take-home pay. But, of course, you don't get something for nothing. That $850,000 has to come from somewhere else: higher payments from the less fortunate (either that amount today, or a whole lot more through the magic of debt with compound interest in the future), or else further cuts to spending. Keep in mind US spending is already the third-lowest of any developed nation on a per/GDP basis (behind only Mexico and Chile, which barely even qualify as developed nations).
That's not the only aristocracy-favoring change Bush embedded in his plan. When you come from old, old money like the Bush's, your real constituency are people with family compounds and second yachts. So, instead of the mortgage interest rate deduction being limited to the first $1 Million of debt, as currently, the tax value is capped at 2% of AGI, so that rich people's write offs can be higher than the write-offs of the middle class, even for a given amount of debt. If you earn $50,000, the maximum tax value of the mortgage interest deduction will be just $1,000 for you, but if, like Jeb!, you earned $7.4 million, go ahead and write off up to $148,000. Jeb! also eliminates the phase-outs for personal exemptions and itemized deductions, and eliminates personal AMT. These changes have absolutely no value for the majority of Americans, but they're a very big deal for the rich.
Jeb! also slashes the top corporate tax rate by 15 points. Keep in mind that US corporations already pay a below-average effective tax rate by the standards of the developed world generally, and they pay vastly less of the overall tax burden in this country than they did in our economic golden age. Corporate AMT is also eliminated, which not only makes it easier for well-represented corporations to dodge taxes entirely, but also increases the incentive for economically inefficient behavior corporations engage in merely to lower tax liability (with AMT, such tax-dodging measure reach a point of diminishing returns and companies stop bothering, but without AMT, there's no limit to how low you can go).
Jeb! also makes sure that rich folks who don't actually work for a living get a bonus in take home pay, relative to those who do something productive with their lives. If you're some snot-nosed trust-fund brat living off a portfolio, you get to pay just 20% on your capital gains, dividends, and interest. If you hire a professional, like a doctor, lawyer, or accountant, they could be paying up to 28% on their earnings, for the "sin" of having actually done something to deserve the money, but you get to coast by with just a 20% cut taken.
Jeb! also screws over small-time savers. The change to a 20% rate on interest may be a windfall to the rich, who previously paid at ordinary income rates, which were higher for them. But for the poor, it represents a tax hike. If you're some small-time saver just trying to build up a little cushion in a savings account, previously your interest might be taxed at just your 10% ordinary rate. Now, that'll be doubled, to help to finance that windfall for the rich.
Probably the most indefensible change, though, would be eliminating the estate tax. Already, even most multi-million-dollar estates are tax free: only if the net value of the estate is over $5.43 million is even a dime of it taxed. But, if you're sitting around waiting for Pappy to die so you can get your hands on part of the Bush family fortune, that cap probably seems much too low, so Jeb! want to get rid of estate taxes entirely. As a result, someone who earns many millions of dollars through his own genius and hard work will be heavily taxed, while someone who "earns" the exact same amount for sitting on his ass and having his name show up in the right will pays NOTHING. As with the reduction of investment tax rates, the principle here is clear: actual productive labor needs to be punished -- the less someone does to deserve his money, the more of that money he should get in take-home pay. The "little people" who actually make their way through hard work, are the ones who should support the country, not the children of the aristocracy. For someone like Bush, who was born into multi-generational wealth, that probably makes perfect sense.
It takes real effort to make Donald Trump look like he's not the dumbest, most vicious guy in a field of candidates. But Jeb! has done it.
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