Republican presidential hopeful Jeb Bush outlined a tax plan on Wednesday that broadly resembles the tax platform presented in 2000 by his brother George W. Bush. The main difference: Jeb would give even bigger tax breaks to the the ultra-wealthy.
The current income tax rate on the wealthiest Americans is 39.6 percent, where it stood when Jeb's brother ran for president in 2000. At the time, George W. pushed to cut the top rate to 33 percent. Jeb would slash it to 28 percent -- almost one-third less than the current rate.
Like his brother, Jeb Bush hopes to persuade other Americans to support his proposed boon for the rich by also providing tax breaks for people with lower incomes. Jeb says he would cut taxes for all families and, like his brother, provide expanded benefits for the poor. George W. vowed to double the child tax credit in 2000, while Jeb says he would expand the Earned Income Tax Credit, which helps the working poor.
Sweetening the deal for the middle class, however, didn't change the fact that George W. Bush's platform was wildly skewed in favor of the wealthy. The nonpartisan nonprofit Citizens for Tax Justice wrote in May 2000 that about 60 percent of the tax cuts proposed by the Bush campaign would go to the richest 10 percent of taxpayers and 43 percent would accrue to the top 1 percent, while costing the U.S. Treasury $1.6 trillion.
Jeb Bush's tax plan appears to have a broadly similar effect: tax cuts for most Americans, but most of the benefits flowing to the richest Americans. Jeb presents his plan as balanced across all income groups. He touts his proposal to end the carried interest tax loophole that benefits hedge fund and private equity managers as evidence that he would take on elite Wall Street interests. Donald Trump and Hillary Clinton have both backed similar proposals.
But Jeb Bush would also give wealthy Americans a massive tax break by slashing their regular income tax rate, and grant Wall Streeters and others who make their money on securities a separate boon by cutting the capital gains tax rate -- which applies to profits from stocks, bonds and real estate. About half of all capital gains flow to the top 0.1 percent of households, according to The Washington Post. Bush proposes cutting the capital gains rate for the wealthiest Americans from 23.8 percent to 20 percent. Even with the massive cut to the top income tax rate, the top capital gains rate would remain lower -- a scenario that would continue to favor money earned from securities trading over traditional wages.
On capital gains, Jeb shrugs off his brother's agenda for that of former Vice President Dick Cheney. As Barton Gellman details in Angler: The Cheney Vice Presidency, when it came time to push the tax platform through Congress, Cheney outmaneuvered George W. Bush to secure an additional capital gains tax cut dramatically favoring the rich. Bush thought such a cut would be seen as a slap in the face to supporters who had believed his "compassionate conservative" campaign pitch, but Cheney won the legislative battle. The top rate on capital gains was (for some years) reduced from 20 percent to 15 percent, while the top rate on stock dividends was cut from 39.6 percent to 15 percent.
Jeb Bush's plan also goes further than his brother's by pushing a hefty corporate tax cut, dropping the rate from 35 percent to 20 percent. Corporate tax cuts benefit wealthy Wall Street interests by boosting business profits and stock prices.
Jeb Bush offers few details on how to pay for all that lost tax revenue. In addition to closing the carried interest loophole, he would cap overall deductions at 2 percent of adjusted gross income, limiting the number of breaks that wealthy families can take. But these changes would almost certainly not be enough to blunt the deficit impact of the tremendous tax cuts largely benefiting the rich.
Mitt Romney was chastised by economists in 2012 for promising to cut the top income tax rate to 28 percent -- the same level Jeb Bush is proposing. Economists said that under Romney's plan, the only way to keep the deficit from ballooning would have been to raise taxes on middle- or low-income Americans.