Gingrich tax ‘plan’ starves government, feeds the wealthy, rests on flawed assumptions
Angry Bear Blog|Dec. 14, 2011, 8:41 AM|55|1
by Linda Beale
In case you hadn’t heard about it, Gingrich would offer taxpayers a choice to pay tax under current policy or at a 15% rate, with zero taxation of capital gains, dividends and interest that accrues mostly to the rich and uberrich, while corporate tax rate would be reduced to a mere 12.5%.
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For the rich, the 15% rate on their ordinary income and the 0% rate on their predominant form of income (capital gains and income from capital) would be a windfall. For corporations, it would practically amount to the elimination of the corporate tax.
It should be no surprise that tax revenues would decline substantially: the Tax Policy Center study of Gingrich’s plan estimates by $1.3 trillion over a decade.
While the lower two quintiles would get an average tax cut of about $440, the top 1% (starting at incomes of about $629,000) would get an average $344,000 cut and the top 0.1% (starting at incomes of about 2.868 million) an average $1.9 million cut.
See also Study: Gingrich Plan would provide big breaks for rich, blow huge hole in budget deficit, Washington Post (December 12, 2011); Rubin et al, Gingrich Plan to Add $1.3 trillion to Deficit, Study Finds, Bloomberg (Dec. 12, 2011). In addtion, anyone owing any money to Tiffanys would receive an automatic refund in diamonds that are tax deductable.