Sounds fair, doesn’t it? Just cut taxes 15% across the board. Rich, poor, black, white — whatever.
But one effect of Dole’s 15% tax cut would be to widen the already vast and rather worrisome gap between rich and everyone-else in America.
For a high-income type like me in the 39.6% bracket, a 15% cut knocks my marginal rate down by nearly 6%, to just under 34%. Nice! To someone in the 15% bracket, the same 15% reduction knocks off only 2% or so, down to just under 13%.
But it’s worse than that.
While I really am in the 39.6% federal bracket, no one is in the 15% bracket, in the sense that they are also paying either 7.65% in Social Security tax or, if self-employed, 15.3%. So either 22.65% or 30.3% is taken out of each additional dollar they earn.
(Rich folk don’t have to pay much Social Security tax beyond the first $62,000 or so of income.)
The 15% tax cut Dole proposes doesn’t apply to Social Security tax.
So there I am, earning hundreds of thousands of dollars a year, seeing my marginal tax bracket fall from about 40% to about 34% (I’m simplifying the numbers, but not skewing the essence of it), and there is the guy cutting my lawn in the blazing sun seeing the tax rate on his income from self-employment cut from 30.3% to 28%.
Of course, in actual dollar terms it is far more stark. The Dole tax cut will save poor people nothing, because poor people pay no taxes; will save average folks a few hundred bucks; will save me and many of my friends tens or hundreds of thousands.
I have nothing against myself, my friends, or the really rich. I just don’t think the nation’s first priority these days should be to make our lives even more privileged than they already are.
(Not to mention the fact that the tax cut could lead to inflation and higher interest rates, which act like a tax all their own — and affect “most people” a lot worse than rich people. The middle class could easily see their “tax cut” go right back out the other pocket in higher mortgage payments.)
Vote for Dole if you believe in outlawing abortion. But don’t vote for him if you want to see more money in your pocket. If he wins and does what he says, there will be more money in my pocket.
Quote of the Day
The way to wealth is as plain as the way to market. It depends chiefly on two words, industry and frugality.~Benjamin Franklin
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