"Are there a few middle-class people who pay the tax? Sure. But on the whole, capital gains taxes are disproportionately paid by higher-income brackets. We find the RNC's claim to be Barely True."
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Economic ignorance at work. First of all the top income tax rate is 35%, not 28% and Obama wants to put it back to Clinton value of 39.4%. Then you have to add state taxes. For example in California the top income tax rate is 10.3% which would be added to Obama's 28% and if the taxpayer is in AMT he couldn't deduct the California tax. That would put the capital gains tax at 38.3% for Californians in AMT. Remember if the capital gain is on property held less than a year regular income tax rates apply now. Capital gains taxes are often a tax on inflation. The additional problem with capital gains taxes is that it freezes commerce since no one wants to sell anything if they have to pay a 38% tax. Instead they wait until they die ... More »
The article points out that a Republican ad attacking Obama for advocating elimination of the capital gains tax break is based upon faulty assumptions and poor reporting. It relies on somewhat dated (2005) figures and makes some rather sweeping generalizations, but overall the story is fair and informative.
This is a very good, well-balanced analysis of the Republican claim that raising the capital-gains tax would "hurt" the middle class. It is well-sourced and uses assumptions generous to the Republican position--and yet demolishes the claim.