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rant

An honest politician -- sorta

So Mitt Romney wants to improve life for "the middle class" by eliminating all taxes on interest, dividends, and capital gains.

Our household income is near the 90th percentile for the U.S., and we made a few hundred dollars last year on interest, dividends, and capital gains; making those things tax-exempt would save us less than a hundred dollars a year. (Except when/if we sell our house, but that's not for many years.) The people who benefit from this plan are those who get a large fraction of their income from interest, dividends, and capital gains -- aka "unearned income", although Romney was careful not to use that term. People substantially richer than me, which means richer than (let's say) 95% of Americans (that's a household income of about $200K).

It's a lovely piece of rhetoric: since most Americans think (incorrectly) that they're in "the middle class," most people will think this plan helps them. Yet he's being completely honest, and it will actually help exactly the people he means to help: the richest 5% or so.

To be fair, Romney qualifies his statement by saying "if you're in the middle class," presumably to avoid accusations of cutting taxes for the ultra-rich. I'm not sure what his definition of "middle class" is -- perhaps his tax cut doesn't apply to the top 1%, but only to the next 4-5% after that.

Here's an alternative approach. America believes in a "Protestant work ethic", right? America thrives because of its hard-working people, right? So let's encourage work by cutting tax rates on earned income, and raising tax rates on unearned income -- exactly the opposite of what the Republicans have been pushing for thirty years. This is because Republican politicians don't actually believe in work; work, like paying taxes, is for the little people.

Comments

I...buh...wha? How on earth is this helping the middle class?...Oh, right, you can see their lips moving, that's how you can tell they're lying.
Well, a lot of Americans who think they're "middle class" are actually "working class" by economists' definitions.

However, my impression from Wikipedia is that the borderline between "middle class" and "upper class" (in the U.S.) is whether you make a majority of your money from wages or from investments, so I guess this tax cut is really aimed at the upper class.

If so, then the plan is pure fluff: it'll save a few hundred dollars a year for a bunch of people, but anybody who would actually notice the difference is disqualified.
Romney is an ass. He was a lousy governor for Massachusetts and he's a vindictive, nasty man. He would be a terrible President, and the only reason I hope he gets the nomination is because he's the only Republican front runner who's not a theocratic loon.
Really?
Approximately half my income these days is from investments; the other half is social security. Gross income is less than $40,000 annually. I live on Long Island and still pay a mortgage and taxes, and probably will for the rest of my life. Please assure me I'm in the upper 5% income bracket.
My "house guest" made less than I did while she was working; her social security and pension investments net her even less than I get. Not everyone who lives off investment income is rich.
Good point: I had forgotten about retirees, the other big category of people who live on investment rather than wages.

So the plan is aimed at the upper class and retirees. Perhaps it'll reimburse the latter for the demise of Social Security and Medicare....
I see the things you point out at work here, and would add that a huge majority of Americans think they're middle class- it's one of our national myths. I forget where I read that in America we don't have poor people, we have temporarily embarrassed millionaires. Everyone likes to think that someday they will bee that tycoon living off investments.

Also, no one bothers to explain to the majority exactly what Mitt's proposal means and the difference between earned and unearned income.

Also I hate fiscal conservatism, and this insane trickle-down economics masquerading as fiscal conservatism even more.