Prior to the supercommittee falling victim to stubborn partisanship, Congressman Sandy Levin reminded his colleagues that a Republican plan to eliminate tax exemptions and deductions would go too far, creating major tax hikes for the middle class and upper middle class.
The Ways and Means Committee ranking member, Levin said the latest GOP plan presented to the supercommittee would cut the top tax rate for the wealthiest Americans to 28 percent and dramatically scale back all of the deductions and credits — tax expenditures — except for the reduced rate for capital gains and dividends.
“If you pull back the curtain on the Republican tax proposal, what do you find? Surprise: A big tax cut for the very wealthy. They’re proposing to go even further than an extension of the Bush tax cuts for the top earners by reducing the top tax rate to 28 percent, with the middle class bearing much of the burden. They would virtually eliminate tax preferences that largely benefit middle-income families and protect tax preferences that almost exclusively help the wealthiest Americans.”
A Royal Oak Democrat who represents most of Macomb County, Levin said that, according to a Joint Committee on Taxation analysis:
· * 81 percent of the benefit of the health care exclusion and 70 percent of the mortgage interest deduction go to families earning less than $200,000 a year.
· * Conversely, 88 percent of the benefit of the 15 percent capital gains rate and 64 percent of the reduced dividends rate go to Americans with incomes above $200,000.
Levin also pointed to research by the Center on Budget and Policy Priorities:
* “The Republican proposal would significantly shift tax burdens from high-income to lower- and middle-income taxpayers.”
* “High-income taxpayers would benefit enormously from the proposed cut in tax rates, while lower- and middle-income taxpayers would suffer disproportionately from the proposed reductions in tax expenditures, since the plan shields the main tax expenditure for the highest-income Americans — the highly preferential treatment of capital gains and dividend income.”
* “Preliminary estimates by the Joint Committee on Taxation of a plan similar to the Republican proposal indicate that taxpayers with incomes above $200,000 would get tax cuts significantly larger than the already-highly-lucrative tax cuts they will get if Congress extends all of the 2001 and 2003 Bush tax cuts.”
