Politics, Moderate

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Politics

Who wins biggest in the GOP tax plan? The lazy rich.

Catherine Rampell on

The Republican tax bill is often described as being weighted toward "the rich." But that's not the full story.

It's actually weighted toward the loafer, the freeloader, the heir, the passive investor who spends his time yachting and charity-balling.

In short: the idle rich.

Republicans claim the opposite, of course. For years the GOP has argued that we need to cut taxes to incentivize work and job creation. If only today's allegedly sky-high marginal rates were lower, millions of talented, driven Americans would apply more of their talent and drive toward growing the economy.

Why? Well, if they got to keep more of their hard-earned cash, there would be a greater payoff from clocking that extra hour, taking on that extra project, seeing that extra patient, scoring that extra client, building that extra business, and so on. Working would look more attractive relative to playing an extra round of golf.

Yet the GOP tax bill offers the biggest windfall to those who sit on their duffs and do nothing.

Rich layabouts benefit in multiple ways from the proposal.

The most obvious way is the repeal of the estate tax, which currently affects only estates worth at least $5.49 million, or roughly the wealthiest 0.2 percent of Americans who die each year.

Eliminating estate taxes paid by the very wealthy few seems unlikely to improve their work ethic. If anything, increasing the value of their bequests will make it less attractive for heirs and heiresses to hold down a job or start a company that they actually run.

This is hardly the only way that the Republican tax proposal would reward passively received income. The big cut in corporate tax rates and the corporate repatriation holiday also disproportionately benefit passive owners of capital rather than workers.

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