In the wake of the current financial markets meltdown – and the meltdown of his own campaign – John McCain unveiled a set of initiatives aimed at stimulating the economy. The centerpiece of McCain’s proposal is a reduction of the capital gains and dividend tax rate from 15% to 7.5%.
McCain’s chief economic adviser, Douglas Holtz-Eakin described the proposal as being:
“targeted at people who have been hurt by the recent financial crisis — seniors, savers, workers, people who are trying to get to college.”
The Tax Policy Center fired up their computers to crunch some numbers on the McCain dividend and capital gains tax cut. The results are summarized below:
What does the the capital gains and dividend tax cut mean for “seniors, savers, workers, and people trying to get to college?” Well, if you are a millionaire trying to get to college, you are in luck. Bill Gates can now go back to finish up that degree. Under this proposal, those making more than $500,000 per year would see 78.2% of the benefit. Millionaires would see an average tax break of $75,255, or a 3.2% increase in their after-tax income. Those making less than $50,000 would, on average, see nothing.
One bright spot in the plan, those making between $50,000 and $75,000 would see an average tax break of $11; almost enough to stimulate sales of these.