Republican Wally Herger of California appears to think that what is wrong with the economy is that the wealthy aren't keeping enough of their capital gains. He and seven other Republicans (Dreier of CA, Johnson of Tx, Brady of Tx, Cantor of VA, Linder of GA, Campbell of KY and Conaway of Tx) have put legislation forward in the House to eliminate any federal income tax whatsoever on the main source of income of the very rich--capital gains and dividends. H.R. 5908, available here Download hr_5908.txt .
Not surprisingly, Herger's press release in support of the bill is an attempt to hoodwink ordinary Americans into thinking that the bill is going to do them good (in spite of the fact that the bill is another piece of welfare for the wealthy).
- Herger talks about the importance of avoiding the purported "double taxation" on investments. Of course, That is simply bunk. Most corporate investments are NOT double taxed. Empirical studies show that more than 200 of the largest corporations in the country pay absolutely no U.S. federal income tax. So as things stand today, corporate shareholders of those corporations are paying only 15% on their dividends and capital gains from selling shares on corporate earnings that haven't paid a penny of tax most of the time. That's while their workers are being made to work longer hours, for less benefits and lower pay, and paying income tax on their salaries at the ordinary income rate, as well as the "payroll" taxes (social security, medicare) that the wealthy don't every pay on their capital gains and dividend income.
- Herger talks about this being intended as a benefit for everyone since "over half" of Americans own stocks and bonds. Again, this is simply a deceptive way to try to gain support from ordinary Americans for a program that is intended to provide a windfall to the wealthy. About half of Americans do own some small amount of stocks and bonds, but for anyone below the top quintile (those making, e.g., less than about 90,000 a year), that's a very small amount of stocks and bonds and they have very little capital gains or dividends during a year. This windfall is intended to benefit the wealthy upper class that holds 70% of the financial assets and makes much of the income taxfree already (tax exempt municipal bond income, for example).
Herger and his co-sponsors want ordinary Americans to believe they are thinking about them, but this bill is intended to provide a windfall for the wealthy and nothing more. It would be extraordinarily costly, and that cost would have to be paid back out of the taxes on the salarires of the working middle class.