By Pat Garofalo
During this week’s GOP primary debate, Newt Gingrich asked Mitt Romney why he has proposed eliminating capital gains taxes for only those making less than $200,000 annually (which is a key component of Romney’s economic plan). “If I’m going to use precious dollars to reduce taxes, I want to focus on where the people are hurting the most, and that’s the middle class,” Romney said. “The people in the middle, the hard-working Americans, are the people who need a break, and that is why I focused my tax cut right there.”
Romney may think he focused his tax cut on the middle-class, but according to a ThinkProgress analysis of Tax Policy Center data*, nearly three-fourths of households that make $200,000 or less annually would get literally nothing from Romney’s tax cut, due to the simple fact that most of those households have no capital gains income
To be exact, 73.9 percent of the households upon which Romney “focused” his tax cut will see zero benefit from it. The table below shows how few households in each income bracket would be affected by Romney’s cut:
For families making between $40,000 and $50,000 annually, Romney’s tax cut comes out to a whopping $216 per year. Meanwhile, the payroll tax cut enacted by the Obama administration in 2011, which Romney derided as a “temporary little Band-Aid,” gave those same households a tax cut of $800 to $1,000.
According to the Tax Policy Center, 67 percent of the entire benefit from lower capital gains tax rates goes to millionaires. 75 percent of the benefit goes to richest 1 percent of Americans. So lowering the capital gains rate for those making less than $200,000 doesn’t do many people any good at all. In a tax plan that costs nearly $7 trillion, you’d think Romney would have found a way to focus his “focused” middle-class tax cut a bit better.
*Of the 155,943,000 households making $200,000 or below, just 40,703,051, or 26.1 percent, would see any tax cut under Romney’s plan. TPC’s data is based on “cash income,” while Romney’s tax is based on adjusted gross income, but widely speaking, the distribution is the same.