The Right and The President's Tax Proposal

The This headline has it right:

The GOP Is Not Happy About Obama's Tax Proposal

From the AP:

Republican lawmakers are already signaling they will do what they can to block President Barack Obama's pitch for tax increases on the wealthiest Americans.

Obama is making that pitch to a huge television audience in hopes of putting the new Republican Congress in the position of defending top income earners over the middle class.

And that's exactly what our friends on the Trib editorial board did this morning.

Only they're not letting you in on the little fact that they're defending the top 1% to the detriment of everyone else.  Take a look:

Mr. Obama tonight will propose a massive attack on savings and investment in another attempt to redistribute wealth while engaging in more social re-engineering.

Proceeds from yet another hike in the tax on capital gains (which, if passed, represents a near doubling since Obama took office) and inheritances would pay for “middle class tax relief.” Never mind that it would have the perverse effect of further draining the private investment pool necessary for job creation and penalize single-income families with children.the

Now let's take a look at what the White House says.  For instance on the tax on capital gains:

Almost exclusively impact the top 1 percent. 99 percent of the impact of the President’s capital gains reform proposal (including eliminating stepped-up basis and raising the capital gains rate) would be on the top 1 percent, and more than 80 percent on the top 0.1 percent (those with incomes over $2 million). Under the President’s proposal, wealthy people would still get a preferential rate on their income from investments, but they would no longer be able to accumulate extra wealth by paying no capital gains tax whatsoever.

And then on the other side:

To ensure that it would impose neither tax nor compliance burdens on middle-class families, the President’s proposal includes the following protections...Capital gains of up to $200,000 per couple ($100,000 per individual) could still be bequeathed free of tax. Note that, since capital gains generally represent only a fraction of an asset’s value, this exemption would allow couples to bequeath more than $200,000 without owing taxes. The exemption would be automatically portable between spouses.

And:

In addition to the basic exemption, couples would have an additional $500,000 exemption for personal residences ($250,000 per individual). This exemption would also be automatically portable between spouses.

And:

Tangible personal property other than expensive art and similar collectibles (e.g. bequests or gifts of clothing, furniture, and small family heirlooms) would be tax-exempt. In addition to avoiding any tax burden on these transfers, this exclusion would prevent families from having to value and report them. As a result of these provisions, only a tiny minority of small businesses could possibly be affected by the repeal of stepped-up basis.

And finally:

No tax would be due on inherited small, family-owned and operated businesses - unless and until the business was sold.

Any closely-held business would have the option to pay tax on gains over 15 years.

Yet somehow none of this information made it into the braintrust's "analysis" of the president's proposals.

The folks on the braintrust opposes the proposal because they're protecting protecting big money,   plain and simple.

They just won't tell you that.