Robert Reno, who writes the column "Reno on Sunday" for the New York newspaper Newsday, wrote on June 8 about the crusade that Merrill Lynch, the huge Wall Street firm, has initiated in the name of lowering the tax rate for capital gains.
A capital gain tax, by the way, is the tax on the "increase in value of an asset (as stock or real estate) between the time it is bought and the time it is sold" (Webster's 9th New Collegiate Dictionary).
The simplistic advertising that Merrill Lynch has presented to Congress reads, in Mr. Reno's words, "like a third grade primer called 'Why Capital Gains Are Our Friends'". Using the nonsensical argument that the number of individuals in the general populace who own stocks has doubled to 43%, they neglect to mention that this increase is through mutual funds, nearly exclusively. They also fail to note that these same figures indicate that 53% of Americans own zero stock. The campaign also omits the information that the top 1% of taxpayers report more than half of all capital gains.
Merrill Lynch goes on to claim that taxpayers with adjusted gross incomes of less than $50,000 accounts for nearly 60% of returns reporting capital gains but fails to explain that the capital gains reported were, on average, minuscule. It neglects to mention that the number of returns has no relevance to the actual total monetary capital gains reported. This is just another example of misusing facts to prove a invalid argument through dubious misrepresentations.
The organization Citizens for Tax Justice found that two thirds of any tax savings from a capital gains tax reduction would go to people making in excess of $241,000 a year. Congress and Merrill Lynch are trying, of course, to characterize the cut as an "across the board" or a "middle-class" tax break, just as Congress and the various Presidents have labored to fool the American public since the first time this ruse was used in 1983 by the Reagan team.
The Republicans in Congress have expressed their desire to cut this tax from 28% down to 20%. Newt Gingrich has expressed his passion for cutting it completely to 0%. Only President Clinton will stand in the way of the enactment of this new Welfare for the wealthy and, since he is still trying desperately to appear as if he is a far right wing Republican, the chances of him trading some portion of the budget for his signature on this piece of garbage is about 50-50. Treasury Secretary Robert Rubin is counseling him to promise a veto, but don't hold your breath.
This cut will not achieve any of the absurd results that Congress and Merrill Lynch promise. It will not result in more tax revenue since capital gains are not realized until the assets are sold and, with the market flying as high as it is, most holders of stock will not sell just to take advantage of a tax cut that would be law for years to come. It also will not result in some huge increase in jobs inasmuch as nearly all venture capital is in the form of pension funds, foundations or endowments, groups that are completely unaffected by the capital gains tax in the first place.
The current rate of 28% is, moreover, not a burden on the rich, as Congress is frantic to make you believe. It is the same rate as the majority of actual working Americans pay on the wages that they truly labored for. It is also 12 points lower than the top tax rate on these same worker's salaries and actually is worth more because no Social Security taxes are taken out of the income. No one will be running away from the stock and bond markets if this cut is not enacted merely because those who would most benefit are already becoming obscenely wealthy from the soaring prices of these markets.
Folks, the lies that Merrill Lynch are spreading are the exact same inventions that have become nearly "folk wisdom" since the time of the Reagan tax break give-aways of the early 80's. The wealthy are desperate to convince you that a capital gains tax cut would benefit everyone. As the unwelcome reality shows, that ain't the case. It will simply be another in the long list of Welfare breaks for the rich.
It is time to let your representatives know that they are there to represent you, not just their financial masters. It is time to take our government back from the wealthy and the Corporations that are running our nation into the ground purely in the name of more and more profits while shifting the majority of the tax burden onto the middle and lower classes. Stop listening to only those that share your narrow and incongruous political viewpoints if what they are telling you will only make them richer and make you appear to be sheep. The rest of us don't appreciate being fleeced in the name of Rush or Newt or Merrill Lynch.
firstname.lastname@example.org or http://www.concentric.net/~jcannon/
Finally, thank you, Mr. John Battiato, for your invaluable assistance.
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