Yesterday, I shared some thoughts about the tax code. Today, I’m going to elaborate on those.
My first prescription was to repeal the Bush tax cuts on the wealthiest Americans. That would increase the highest marginal rate on high income tax payers by 4%. That means that every taxable dollar above $250,000 would be taxed $.39 as opposed to the current amount of $.35. That’s right. We’re talking about four cents on the dollar. When you’re making a quarter million dollars, you can afford it. It’s a modest proposal.
Second, I advocated taxing all capital gains at the same rates as other income. Right now, if you realize capital gains on an investment that you’ve held for more than one year, those gains are taxed either ten or fifteen percent, even if the income would otherwise be taxed at 25, 28 or 35%. Can anyone really justify taxing income derived from a stock transaction at a lower rate than income derived from real work? Some people will say that investors deserve their profits because they are contributing their money. I say that their profits should not be taxed less than the workers without whom they would have no product or service from which to derive those profits.
Third, I addressed Medicare and Social Security by advocating the lifting of the cap on payroll tax. Right now, you only pay payroll tax on $107,000 of your wages or salary. That’s a lot of money to leave on the table. Let’s get it and bolster those trust funds.
Now, the first proposal is a modest return to a tax structure that seemed to work pretty well during the Clinton years. At worst, it certainly didn’t hurt anything, and Clinton left office with a pretty hefty surplus. The second proposal call for income derived from capital gains, that is unearned income, to be taxed at the same rate as all other income, especially that derived from work. Third, I called for payroll tax to be applied to all dollars, not just the first $107,000. I’m sure there are folks that will cry class warfare, but it’s not. It’s simply treating the paycheck of rich people the same as those of workers.