Obama’s Attempts to Chip Away at Wealth Inequality

Matt Schiavenza of the Atlantic comments on President Obama’s series of tax reform proposals aimed at reducing inequality, which will be announced during the president’s State of the Union address.

“Capital gains tax reform has been a Democratic Party goal for years. But its inclusion at the center of Obama’s economic agenda signals renewed attention on wealth, rather than income, inequality … The easiest way to get rich isn’t to make a lot of money. It’s to have a lot of assets in the first place. Better yet to inherit it.”

“Under current tax laws, America’s highest earners pay income tax of 39.6 percent. Capital-gains taxes, even after Obama’s shift, cannot exceed 23.8 percent. The Center for American Progress characterizes this difference as a government subsidy for investment income, and an expensive one at that.”

“The Congressional Budget Office estimates that this subsidy amounts to $1.34 trillion over the next ten years. Sixty-eight percent of that went to the top one percent. Given this situation, it comes as no surprise that the country’s 400 top earners, or 0.0003 percent of the taxpaying population, earned 12 percent of capital gains benefitting from lower rates.”

“If implemented, Obama’s plan will strive to narrow this gap. Will it work?”

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