George W. Bush wants to enact a fiscal program that appears to be a take-off on the popular television show, “Who Wants to be a Millionaire?” Instead, his real-life program should be titled, “Who Wants to Help a Millionaire?” George W. Bush wants to enact a fiscal program that appears to be a take-off on the popular television show, “Who Wants to be a Millionaire?” Instead, his real-life program should be titled, “Who Wants to Help a Millionaire?” Bush insists that it should be the federal government—and that’s his final answer.
The proposal he recently submitted to Congress puts him in the position of being what Jesse Jackson calls a reverse Robin Hood. Bush robs from the poor to give to the rich. And he does it with a straight face.
According to an analysis of the proposal issued by the Brookings-Urban Institute Tax Policy Center, almost half of all tax filers—49 percent—would receive tax cuts of less than $100. The average tax reduction for the bottom 80 percent of tax filers would be $239 under the Bush plan.
By contrast, the top 1 percent of filers would receive an average of $24,400. Those with incomes of more than $1 million would get $88,900. Nearly 60 percent of the reductions would go to the top 10 percent of earners.
Of course, Bush supporters contend that it’s only fair that the people receiving the most income should enjoy the most tax savings. But that’s not the issue. The issue is: Why should the federal government, already faced with a reeling economy, provide more tax relief to people able to take care of themselves financially on top of the measures already enacted to primarily benefit them?
While steadily marching down this misguided path, the White House is playing a numbers game. It boasts that 92 million taxpayers would receive an average tax cut of $1,083 in 2003. Yes, if you average the reduction of taxes to be paid by the wealthy with the rest of population, that figure would be accurate. But when you examine how Mr. or Ms. Citizen will fare, nearly 80 percent of tax filers would earn less than the figure cited by the White House, according to the Tax Policy Center data.
If the Bush program passes without change, it would cost the U.S. Treasury $364 billion in lost taxes on dividends alone. The Bush plan would accelerate tax rates cuts scheduled for 2004 and have other changes, such as the marriage penalty tax, kick in sooner. Over the next decade, the changes would result in a loss of more than $900 billion.
Robert Greenstein, executive director of the Center on Budget and Policy Priorities, a research group in Washington, D.C., says that middle-class taxpayers will experience temporary tax relief. “By contrast, the most affluent Americans would receive a lavish new tax cut that is permanent, the elimination of taxes on corporate dividends.”
Putting aside the question of whether the Bush plan would be the best way to jumpstart an economy that has seen more than 1.2 million jobs lost since this administration has been in office, the plan would be disastrous for state governments.
Already facing their worst fiscal crisis in 50 years, states would lose $4 billion to $5 billion a year, according to the Center on Budget and Policy Priorities. The dividend tax exclusion would be keenly felt in the 37 states and the District of Columbia, each of which link their tax systems to the federal system.
States have already suffered financially because of last year’s change in the estate tax. New retirement breaks and education savings and bonus provisions are likely to further reduce state revenues. That will result in further cuts in jobs and services at the state level, experts predict.
Greenstein explains, “There is no ‘free lunch,’ and these tax cuts ultimately would have to be paid for, either through higher interest rates and slower economic growth caused by swollen deficits or through budget cuts, most likely programs for the middle class and the poor.”
And that’s exactly the point. Even if we don’t go to war with Iraq, the plan outlined by Bush will continue