Bush's unkind cuts
A BOSTON GLOBE EDITORIAL
boston.com
1/7/2003
PRESIDENT BUSH'S proposal to drain $600 billion in tax
cuts from the federal budget over the next 10 years would
benefit a relatively few Americans - but they are the favored
few.
Emboldened by Republican victories in November that put his
party in control of Congress, Bush is expected to call today for
accelerating cuts in income tax rates and eliminating the tax
on stock dividends, among other changes. This, his analysts
say, would boost the stock market and stimulate the economy.
But the stock market and the economy are not the same thing.
Despite the great influx of average taxpayers into the market
through mutual funds and 401(k) plans, the Federal Reserve
estimates that only about half of American families own any
stock at all, and dividends are still paid overwhelmingly to the
wealthiest Americans.
According to the Center on Budget and Public Policy Priorities,
the top 1 percent of tax filers - those making more than
$300,000 - will get 42 percent of the benefit from eliminating
the dividend tax. Accelerating the cuts in income tax rates will
similarly benefit those with the highest incomes.
Last week Bush complained that pointing out these realities
amounts to waging ''class warfare.'' But Senator Harry Reid of
Nevada, a Democrat, had it about right when he said Sunday
That the real class war is being waged by Republicans against
the poor and middle classes, who will benefit little from the tax
cuts but will be hurt by cuts in services - especially Medicare
and Social Security - that will be threatened as federal deficits
balloon.
Bush's proposal is particularly cynical in linking the tax cuts to
revenue sharing for cash-strapped states and an extension of
unemployment benefits for the 750,000 Americans whose
checks ran out on Dec. 28. Both should be passed quickly on
their own merits and not be used as bait - or ransom - for the
larger tax bill.
The states are facing their worst fiscal crash in 60 years, with a
revenue gap of between $60 billion and $85 billion for the
fiscal year beginning in July. Given costly federal mandates
such as the ''No Child Left Behind'' education law, a hand up
from Washington is only fair. Also, like the rebates in the
Democrats' alternative plan unveiled yesterday, the $10 billion
in aid to states would more immediately stimulate the
economy. The dividend cut would not be felt until April 2004.
The White House said yesterday that the full Bush proposal -
including the elimination of the so-called marriage penalty and
a bigger child tax credit - would save 92 million taxpayers an
average of $1,083 a year. But the concentration of wealth at the
top has become so great that the majority of taxpayers are
below the ''average.'' That inequity would only be made worse
by the president's costly scheme.
This story ran on page A14 of the Boston Globe on 1/7/2003.
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