Take from the Super Rich and Give to the Rich
Thus, as a first approximation, the plan increases the progressivity of the tax code by redistributing income from the very rich (e.g., CEOs, hedge fund managers, superstar athletes and actors) to the upper middle class (e.g., doctors, lawyers, congressmen).
Charlie Rangel, a man of the people…just not normal people such as middle class schlubs like me and most people reading this blog.
According to the Tax Policy Center here is the effect of the tax proposal in terms of percentage of income (on average, results for individuals will vary).
- Those in the bottom Quintile get a tax cut equal to 1% of income.
- Those in the 80th-90th percentile a tax cut equal to 1.1%.
- Those in the 90th – 95th percentile receive a tax cut equal to about 1.5% of income.
- Those earning incomes between $500,000 to $1 million will see a tax increase of 2.2% of income.
- Those earning over $1 million will see a tax increase of 4.5% of income.
So, just as with the Bush tax cuts the bulk of the money will go to those in the top income percentiles. Talk about pandering to the rich and successful.
Actually, the problem Rangel is running into is that most of the income tax is collected from the top income percentiles so naturally when you cut their taxes they get a much larger dollar benefit than those at the lower end of the income distribution.