by Linda Beale
Romney’s Tax Plan Helps the 1%, Hurts the Bottom 40%
In spite of having to suffer some closer view of his Bain Capital time–during which the self-proclaimed “job creator” businessman did a lot of job cutting and destruction of going concerns so that his investors could make more money, Romney continues on his well-financed cruise to the GOP nomination.
It’s perhaps an appropriate time to bring out the Urban Institute/Tax Policy Center’s analysis of the Romney 59-point tax plan. They have produced a table (T12-0004) showing “Mitt Romney’s Tax Plan Baseline: Current Policy Distribution of Federal Tax Change by Cash Income Percentile, 2015.” The table looks at individual and corporate income, payroll (Medicare and Social Security) and estate taxes to determine the change in the total federal taxes for the various quintiles under Romney.
Who would have federal tax increases under Romney? Not the rich who have captured more and more of the income over the last decades. Treating corporate shareholders as the payers of the corporate income tax, the table shows that the top one percent would get an average federal tax cut of $86,535 under Romney’s plan, while the top one-tenth of one percent would get an average tax cut of $432,940.
But guess what, the bottom two quintiles–made up of the poorest Americans who are struggling to make ends meet and who can be pushed off kilter by a single illness or other unexpected expenditure–will be the ONLY ones in the distribution who will pay more federal taxes under Romney’s plan than under the current policy baseline. About 18% in that lowest quintile will pay almost a thousand more in taxes. About 13% in the lowest quintile will pay about $125 less in taxes. Similarly, in the second lowest quintile, about 18% will pay almost a thousand more; however, at least for this quintile about a third will pay almost $500 less, so that the overall increase averaged across these groups is less.
This is an unacceptable result. The New York Times recently reported on various studies on inequality and a survey that shows that more and more people, across the spectrum of ideologies, ages, gender and other lines, now consider the conflict between rich and non-rich as important. Survey Finds Rising Perception of Class Tension, New York Times, Jan. 11, 2012.
The demographics were surprising, experts said. While blacks were still more likely than whites to see serious conflicts between rich and poor, the share of whites who held that view increased by 22 percentage points, more than triple the increase among blacks. The share of blacks and Hispanics who held the view grew by single digits.
What is more, people at the upper middle of the income ladder were most likely to see conflict. Seventy-one percent of those who earned from $40,000 to $75,000 said there were strong conflicts between rich and poor, up from 47 percent in 2009. The lowest income bracket, less than $20,000, changed the least.
The reason the rich are getting richer is because the country has followed policies, essentially since Reagan, that favor the rich–from deregulation to relaxation of anti-trust to reduction in tax burdens to privatization to deunionization. To add further rich-friendly policies to our tax code at this point should not be countenanced.
originally published at ataxingmatter