Three hundred and twenty billion dollars could be coming to you, middle class citizens.
At least, that’s how much revenue it has been projected that Obama’s proposed tax changes will bring over the next ten years.
His plan? To make the tax code more fair and less complicated. Loopholes that for years have been benefiting America’s wealthiest citizens may soon be closed.
“Rather than make it easier for middle-class families to make ends meet, our tax system has changed over time in ways that make it easier for the wealthy to avoid paying their fair share,” said the White House in a fact sheet.
Indeed, the wealthy are paying fewer taxes today than almost anytime in American history.
This includes ridiculously low tax rates on capital gains, which are only taxed at 17 percent, while even the highest-income individuals are supposed to pay a 35 percent tax rate on their earnings.
Capital gains are when a capital asset (e.g. real estate or investments) increases in value so that it is worth more than the price at which it was purchased. Capital gains is how many invested in the stock market make their money.
When you have the “highest-income 400 taxpayers in 2012 (obtaining) 68 percent of their income from capital gains,” as stated in the White House fact sheet, that is a lot of money being taxed at under half of what those individuals’ income bracket would have them pay.
Obama’s plan to fix this problem, starts by raising taxes on dividend rates and capital gains to 28 percent, the level they were at during Reagan’s term in office. Note that this is still significantly lower than the highest income tax bracket’s 35 percent rate.
Obama also wants to get rid of the trust fund loophole. Assets would no longer be able to be passed down tax-free from generation to generation, which is how many of America’s wealthy pass down their wealth.
Before you start protesting about how this will affect you, realize the White House has said these changes will affect few people outside of the top 1 percent, largely because capital gains under $200,000 would be tax free. And if you are in the top 1 percent, just stop. You don’t get to complain about paying a little closer to the amount you’re supposed to be paying.
How does this affect the middle class? The revenue gained by these changes will go straight to you. A proposed $500 second-earner tax credit will go to aid 24 million families with two working parents. It will make it easier to save for retirement, make possible a tax cut of up to $3,000 per child for child-care costs, and expand education tax benefits in an effort to make college more affordable.
According to Harry Stein, director of fiscal policy at the Center for American Progress, “What you’re seeing here is really dedicated middle-class tax relief to really get at that problem of middle-class wage stagnation.”
Republicans have already made clear they aren’t on board with this plan, as their main goal is to cut tax rates. Never mind if this would give a tax break to the millions of middle class families. Since the words “tax” and “raise” are in the proposal, they’ve automatically withdrawn their support.
As an independent who tends to lean toward the Republican side, I am disappointed they are being so narrow-minded. Yes, Republicans are typically against higher taxes, but the wealthy’s taxes have been shrinking for years. This will merely start to reverse that process. In doing so, these changes won’t hurt the wealthy (not being rich myself, I can only wonder if they’ll notice the difference), but will do much to aid the middle class.
But of course, this closing of loopholes could affect many Congressmen personally, as the net wealth of Congress members averages over $1 million, with the wealthiest member being Darrell Issa at an estimated $450 million.
America’s confidence in Congress is record-low at 7 percent, even lower than America’s confidence in banks! Obama’s proposal is the perfect time for Congress to show Americans—especially the middle class—that they do have the country’s best interest at heart.
If the Republicans fight this, it won’t look like they’re sticking to their anti-taxes ideals; it will simply looking like they are protecting their money hoards as well as the pocketbooks of those who fund their campaigns.