The Welfare Kings

by Dean Baker
May 10, 2006


Dean Baker is the co-director of the Center for Economic and Policy Research.

At a time when tens of millions of workers are struggling to pay for gas for their car, electricity for their home, and medical care for their families, the Republicans have stepped forward with a plan to help. They want to give another $20 to $30 billion in tax cuts to the rich.

This temporary assistance to the needy rich (TANR) takes the form of a 2-year extension of a tax cut that made the maximum tax rate on stock dividends and capital gain income 15 percent. While tens of millions of ordinary workers pay income tax rates of 25 percent on their wages, the Republicans argue that Bill Gates and his billionaire friends shouldn’t have to pay taxes at more than a 15 percent rate. Most of this tax break goes to the richest 1 percent of the population. This is because they hold most of the country’s stock—and even when middle income people hold stock, it is usually in retirement accounts, which are not affected by this tax cut.

The Republicans don’t argue that rich people should pay lower tax rates just because they are rich. Republicans—and many Democrats—argue that rich people should pay lower tax rates because they get their income from owning stock instead of working for a living.

(read the rest)