Bush tax cuts would again reward the rich
With unemployment swelling, state and federal deficits spiraling higher, the bill for the military and homeland security skyrocketing, the last thing our anemic economy needs is further tax write-offs for the wealthiest Americans.
Yet this is precisely the answer to a host of economic woes that President Bush has shamelessly given the nation.
Bush continues to pose as a populist president. His administrations marketing strategy has been exceptionally successful. Remember those $300 tax rebates? Middle and lower income families gobbled them up while more some 60 percent of the 2001 tax cuts went to the wealthiest 1 percent of taxpayers.
And the economy sputtered along.
Then came the Bush campaign to repeal estate taxes. It was signed into legislation after a clever campaign in which the opponents began, at the advice of a conservative think tank, to refer to the tax as a death tax. Opponents cried out that it was hurting farm families. Despite failing to produce the alleged victims, the tax phaseout passed Congress. Consider, meanwhile, that in 1999, the last year for which figures are available, only 2 percent of all the people who died had estates big enough to be subject to the tax. More than half the tax paid came from the 3,300 largest estates, each of which was valued at more than $5 million.
Last week was the opening phase of round three in Bushs efforts to reward the rich. This time it came in a surprise call to end all taxes on shareholder dividends, at a cost of $374 billion to the treasury. This is the centerpiece of the $674 billion Bush tax cut program.
Again some clever -- and misleading -- marketing began. White House spokesman Ari Fleischer explained that more than half the money from dividend taxation relief will go to seniors. Bush added, Over 50 percent of the seniors receive dividends. Many of the shareholders that pay the taxes are senior citizens.
By citing statistics showing that a large share of the benefits from the proposal would go to the elderly, the Bush team wants to give the impression that it would benefit the average or typical elderly person. This is not the case. Most elderly have fairly low incomes and would receive little or nothing from this tax cut.
The Bush rhetoric conceals a basic reality: Elderly people with incomes below $50,000, a group that represents two-thirds of all of the elderly in the nation, would receive only 13 percent of the tax cut going to the elderly and less than 6 percent of the total tax cut.
The Washington-based Center on Budget and Policy Priorities estimates that nearly 40 percent of the benefits of the proposed Bush tax cut that would accrue to elderly individuals would flow to the 2.5 percent of elderly people with incomes exceeding $200,000. Nearly three-quarters of the benefits that would go to the elderly would flow to the 19 percent of elderly with incomes above $75,000.
Analysts were quick to note that Bush himself would have saved $44,500 in income and dividend taxes on the $711,000 in taxable income he reported on his 2001 return had todays plan been enacted last year. Vice President Dick Cheney would have saved $326,555 on 2001 taxable income of $4.3 million. Remember this when the administration glowingly talks about the hundreds in tax relief most citizens will save in the years ahead.
The Democratic lawmakers tax relief plan would be more evenly distributed. It would also be smaller and much cheaper, at a cost of $136 billion over 10 years.
So we are left wondering if another slick sales campaign can again bamboozle the populace? Or will sound fiscal policies win out? The debate has only begun.
National Catholic Reporter, January 17, 2003