Michele Bachmann wants to get rid of taxes on capital gains, which would take certain millionaires off of income tax rolls
J. Scott Applewhite / AP
In a revealing interview with Steve Moore of The Wall Street Journal, Representative Michele Bachmann(R-MN) called for repealing taxes on capital gains. She also said she strongly believes that everyone should pay some income tax.
This got me wondering: What would happen to the number of non-payers if the GOP presidential hopeful got her wish and Congress did abolish taxes on gains. My Tax Policy Center colleague Dan Baneman ran the numbers: Such a step would remove 23,000 millionaires from the income tax rolls, and cut their annual tax liability by an average of a half-a-million dollars. If all investment income (including interest, dividends, and gains) were made tax free—an idea backed by Tim Pawlenty, another GOP presidential aspirant– 57,000 households making $1 million or more would avoid paying any income tax, about 50,000 more than today.
Btw, this largess would add about $25 billion to the deficit in one year (eliminating taxes on gains only would reduce tax liability by roughly $11 billion for those $1 million-plus households who no longer paid income tax).