Economy misses out as taxes rise for the rich: Varney

We had a weekend to digest the tax plan from House Republicans.

Here's what I think: Looks like Republicans wrote the business side, but it sure seems like Democrats wrote the new rules for individuals.

Overall, business will pay less. Classic Republican policy: Let capitalism work, bring back the trillions of dollars from overseas and let business make more profit. The economy will get help. The stock market gets another boost. This is the kind of thing we were expecting from the GOP.

But we were also expecting tax relief for the people who pay most of the tax. That, we didn't get. Right now, the top 1% of income earners pays about 40% of all income taxes collected. If the tax plan goes through as is, the 1% will actually pay more.

Think about it: Their top rate, 39.6% stays. No cut. They will no longer be able to deduct their local income taxes, and they will lose at least some of their mortgage and property tax deductions too—the amount they pay to the Treasury will go up!

Now the top 1% doesn't get much sympathy these days. They've been demonized for a generation. But unless this plan is changed, extra money flows to the government, not to the job creators. The economy misses out.

Of course there is a heavy dose of politics in all this. The Republicans seem to have bought the Democrat line about taxing the rich. And they've bought the line that only tax increases can help the deficit. As The Wall Street Journal suggests, Hillary Clinton could have written this plan!

Sum it up: This is a middle class tax cut. It is a business tax cut. But overall it is a tax increase for the 1%.

And that means the GOP promise of a surge to 4% economic growth looks unlikely.