The Work Penalty September 27, 2005March 2, 2017 TEN, EIGHT, THREE AND FORTY The National Debt will approach TEN trillion by the time the next President is sworn in. Nearly EIGHT trillion of that debt, accumulated since 1776, will have been racked up by just THREE Republican Administrations: Reagan, Bush, and Bush. Even at today’s low interest rates, nearly FORTY percent of the $893 billion Americans paid in personal income tax this year went to pay the interest on the debt. (I know I said all this yesterday – my short-term memory isn’t that bad – but I’m trying to find ways to make it sing. Or at least stark.) THE WORK PENALTY What the Republican leadership has managed so effectively to do is shift the tax burden from wealth to work. It used to be that an heiress who inherited $600 million would pay the same effective 39.6% top rate on her $20 million a year in dividends that a surgeon would pay on his $300,000 in ‘earned income.’ But in recent years the Republican leadership has cut her top tax rate from 39.6% to 15%, while cutting the surgeon’s top bracket from 39.6% to 35%. Much of the heiress’s income came in the form of long-term capital gains. The Republican leadership has cut her tax on that income significantly as well, from 20% to 15%. Her tax on municipal bond interest remains 0%. No cut was possible there. And now the Republican leadership is hell bent on lowering the top estate tax rate on great wealth from ‘about half’ to ‘exactly zero.’ The Republican leadership doesn’t like taxes – who does? – but if we have to have them, they would at least like to see the burden shifted from wealth to work. Laid out plainly that way, some will nod their heads in vigorous agreement with the underlying philosophy. Others will despair at what they see as the shortsightedness and immorality. That’s what makes horse races.