Tax System Favors Wealth Over Work

from Trouthout.org:

The major vehicle is George W. Bush’s 15 percent levy on long-term capital gains - the lowest since FDR’s first term - and on corporate dividends. The top 1 percent of US households owns nearly 40 percent of all privately held stock, from which the dividends flow. Similarly, the super-rich get more than half their income from capital gains, as documented by tax expert David Cay Johnston in his book “Perfectly Legal.” In the meantime, for the working middle-class, the tax rate on wages is 25 percent.

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There are six today, with the top four taxed at 25, 28, 33 and 35 percent - a narrow spread, easily offset by provisions like the capital gains rate. The top rate kicks in at about $400,000 of taxable income, a practice Johnston told Truthout he finds “bizarre.” It’s a long way, he argued in a recent email, from $400,000 to $1 million, $5 million, $100 million and hedge-fund billions: “Why don’t we have higher rates for those incomes?” he asked.
Even the bottom marginal rates help top earners. A millionaire, filing singly, pays the same 10 percent on the first $8,375 of taxable income as the working poor, and so on, up the income scale. As the Center on Budget and
Policy Priorities notes, the real winners from extending Bush’s middle-class tax cuts wouldn’t be middle class: “In fact, a family making more than $1 million will receive more than five times the tax cut benefit, in dollar terms, as a middle-class family making $50,000 to $75,000 … ”
The tax code is also loaded with deductions that effectively rain down dollars on the rich. The code doesn’t overtly discriminate, but it’s hardwired to make every tax break worth more at the top.

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It’s taken a fortune in lobbying and campaign contributions, but America’s tax system is bearing golden fruit. As even a conservative can see, it’s shifting income to the wealthy.