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December 09, 2005
Tax cuts for "the rich?" No -- they're for you and me
The House of Representatives has just voted to extend, for two years, a reduced tax rate on capital gains and corporate dividends. If the bill is adopted by the Senate, the long-term capital gains rate of 15% and the tax rate on qualifying dividends, also 15%, will apply through 2010, instead of 2008, when they are currently due to expire.
These tax breaks are invariably derided by liberals as "tax cuts for the rich." But they are nothing of the sort. That's because a lot of lower- and middle-class people also benefit from both of these tax breaks.
(Disclosure statement: I'm talking partly out of self-interest here, because Kafalas.com Acres, currently on the market, stands to net us a hefty capital gain, if we can sell it. But hey, we live in a rented house -- so we're hardly "the super-rich," as one Democratic Congressman tried to describe the people who benefit from the reduced tax rate.)
With millions of blue-collar and middle-class Americans investing in mutual funds these days, those people are subject to dividend and capital-gains taxes. We're not just talking about fat cats here. So when you hear someone like House Majority Leader Nancy Pelosi say that the tax cuts are "increasing the deficit by $20 billion in order to give tax cuts to the wealthy," don't believe her. These tax cuts aren't just for the wealthy -- they're for anyone who puts money away for retirement.
Posted by Urbie at December 9, 2005 08:35 AM