New Analysis Of Jeb’s Tax Plan Details Massive Tax Giveaways To Wealthiest Americans
Yesterday, former Florida Governor Jeb Bush released a tax plan that he pledged would “unleash 4% growth.” Bush took pains to emphasize that his plan would benefit working families, much like many of his opponents for the Republican nomination. But a new Center for American Progress Action Fund analysis has crunched the numbers, and despite Bush’s rhetoric, the reality is that his new tax plan is a huge giveaway to the country’s wealthiest at the expense of everyone else.
The facts are that Bush’s tax plan:
1. Cuts the Top Tax Rates for the Wealthy Few: Under the Bush plan, the top tax rate would be capped at 28 percent, or a nearly one-third drop from the 39.6 percent top rate in the law now. Cutting top tax rates would mean a huge tax windfall for the wealthiest taxpayers—and could exacerbate rising economic inequality while doing nothing to spur economic growth. The analysis supporting Bush’s plan obscures this massive giveaway for high incomes by only looking at the tax plan’s impact on people earning up to $250,000.
2. Slashes the Corporate Tax Rate and Other Corporate Taxes: The Bush tax plan also proposes dropping the corporate tax rate to 20 percent from the current rate of 35 percent. The Congressional Budget Office estimates that the top 20 percent of income earners effectively pay almost four-fifths of the country’s corporate taxes, while the bottom 80 percent of households pays just 21.4 percent. Nearly half of the corporate tax burden—48.7 percent—falls on the top 1 of households alone. No surprise here: corporate ownership is concentrated among high-income households, so cutting taxes on corporations would be a very large giveaway to the wealthy.
3. Lowers Tax Rates on Capital Gains and Dividends: Bush is also pitching to lower the top tax rate on capital gains and dividends, from 23.8 percent to 20 percent. Income from capital gains and dividends goes overwhelmingly to the wealthy. CAP has previously shown that a lower tax rate on dividends and capital gains is one of the ways the U.S. tax code helps those who are wealthy enough to own capital accumulate even more wealth, worsening income inequality. Jeb’s tax plan would go even farther.
The problems with the tax plan don’t end there. All these tax cuts for the rich will be costly. Even the four conservative economists who wrote a white paper defending the Bush plan say so. They say the plan will add $1.2 trillion to the deficit over the next ten years, using a vague model that presupposes significant economic growth resulting from the plan. When using a more traditional way of evaluating the plan, these same conservative economists say it would cost an astounding $3.4 trillion— that is about $45,946 per child under 18 in the United States.
Additionally, the tax plan’s supporters have vastly inflated claims of the economic growth it would create. We know from Jeb’s brother George W. that substantial tax cuts, combined with slashed regulations as Jeb has also promised but not specified yet, do not result in the booming economy we are promised. This tired rationale for selling tax cuts should not be used again after it has been consistently debunked. But it’s what we are getting from Jeb’s economic advisors, two of which were also advisors to his brother.
We aren’t alone in exposing Jeb’s tax plan for what it is. The New York Times calls the plan a “large tax cut for the wealthiest” and estimates that taxpayers who earned over $10 million dollars in 2013 would have saved an average of $1.5 million with this tax plan in place.
BOTTOM LINE: Though Jeb Bush and his Super PAC have boasted the theme of a “right to rise” as a central campaign message, his tax plan proves that his policy priorities are squarely focused on improving the fortunes of the country’s wealthiest—even though everyone else will be left with the bill. We’ve seen how much that fails most Americans, and how it fails our economy overall. We need policies that help working families by growing the economy from the middle-out, not the top down.