Tax Questions:

Q: Doesn’t this plan represent a huge tax cut for the rich by repealing the capital gains tax, dividends taxes, and the estate tax? Why give the rich a tax cut, when the government has such huge spending demands in the future?

A: This plan closes tax loopholes and eliminates tax shelters for the rich. It eliminates the current tax penalty on saving and investment. Current U.S. tax law discourages saving by taxing it twice: once when the money is earned by the taxpayer, and again when it is saved and yields a return. That is unfair for the majority of Americans trying to save for the future. This is not a question of “rich” versus “middle income”; for instance, over half of U.S. households now own stocks, and the overwhelming majority has some type of bank account – all these people are penalized by the current tax treatment of savings.  The proposed change in the tax code will encourage saving and investment, which is critical for job creation, economic growth, and rising living standards. A growing economy benefits everyone, and is key for producing the revenue needed to support government spending obligations. The Simplified Tax incorporated in the Roadmap is more fair than the current tax code. Most of the deductions and credits in the current system are used by upper-income individuals. This plan clears out these special preferences and deductions, lowers tax rates, and offers a generous exemption amount. For instance, the standard deduction amount – $25,000 for a couple – is twice that of current law.