Columnist George F. Will, in "A Path to Solvency" (Feb. 8), approves of a tax plan offered by Republican Rep. Paul Ryan of Wisconsin. I focus on two of its main features: 1) Mr. Ryan proposes a 10 percent federal tax rate on incomes up to $100,000 for joint filers ($50,000 for single filers), with no exemptions or deductions. 2) He proposes elimination of federal tax on interest, capital gains and dividends.
Now, under the current system, for a family of four the standard deduction and exemptions exclude almost the first $25,000 of income. Under Mr. Ryan's plan, the government would take 10 percent of incomes of millions of the working poor and near poor not now paying it (although they do pay 6 percent to 7 percent in the Social Security payroll tax).
At the other end, eliminating tax on interest, capital gains and dividends would represent a massive tax cut for the rich. The richer a person is, the greater the proportion of income that comes from these sources. For the extremely rich the effective tax rate would be near zero.
This plan that Mr. Will says is about solvency would actually effect an enormous redistribution of income from lower-income people to the rich -- this in a country where the steepness of income inequality, or concentration of wealth in the hands of a few, is already much greater than in any other industrialized country of the world.
Making the rich richer has always been the core purpose of Republican tax policy. But pushing such a plan now, at a time when millions more Americans are pushed into poverty by unemployment, is particularly repugnant.