In other words: A discussion of The Bush Administration
CLASS WARFARE
The GOP love to cry "They're practicing Class Warfare" whenever anyone mentions that the tax cuts benefit the rich. They love that term, mostly because they are actively engaged in Class Warfare right now. Its not that the rich doesn't want to do their fare share. They don't want to help out at all.
Class Warfare is happening and the rich are winning, and most people didn't even know we were at war.
Why your tax cut doesn't add up
If Bush gets what he wants, the income tax will become a misnomer—it will really be a salary tax. Almost all income taxes would come from paychecks—80 percent of income for most families, less than half for the top 1 percent. Meanwhile taxpayers receiving dividends, interest and capital gains, known collectively as investment income, would have a much lighter burden than salary earners—or maybe none at all. And here's the topper. In the name of preserving family farms and keeping small businesses in the family, Bush would eliminate the estate tax and create a new class of landed aristocrats who could inherit billions tax-free, invest the money, watch it compound tax-free and hand it down tax-free to their heirs.
By drastically favoring investment income over salary, fees and other "earned income," Bush would make it harder for people who start out with nothing to earn their way up the economic ladder, because they'd pay full taxes on almost everything they make, but he'd shower rewards on people who have already made it to the top rungs.
With the current rate of spending and tax-cutting, there's no way the government can even remotely balance its books without huge spending cutbacks, which are unlikely, or new sources of revenue. Bush people talk about growing our way out of budget problems, but that just doesn't seem possible—especially if Bush's two big new proposed tax cuts are adopted. Private whispering among experts from right to left is that some sort of national sales tax is inevitable if we continue current spending patterns, exempt investment income from taxation and try to fix the AMT. Who would be affected the most by such a "consumption tax"? People who live from paycheck to paycheck, spending virtually every dollar that comes in the door.
Greg Mankiw, chairman of Bush's Council of Economic Advisers, argues that lowering taxes on investment income doesn't reward just the well-off, even though they get the bulk of that income. "When you reduce the taxes [on capital], you get higher investment," says Mankiw, chosen by the White House as its spokesman for this article. "And when you get higher investment, workers are more productive and get higher wages." Over time, he argues, more and more of the benefit goes to workers. It sure sounds great—but it's not provable, at least not to me. This isn't trickle-down economics, it's seep-down economics. When I paid lower taxes on the dividends I got from Lee Enterprises, an Iowa-based newspaper chain, did Lee run out and give raises to reporters and buy more presses? I think not.
- rob 5:04 PM - [PermaLink] -
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