Editorial: Tax shift/The rich did get richer
August 20, 2004 ED0820
During a campaign rally in Wisconsin on Wednesday, President Bush recognized a series of local business owners and singled them out as beneficiaries of the three big tax cuts he has pushed through Congress since 2001. "Because they are dreamers and doers, people are working," the president said. It's the same folksy sales pitch Bush has used since the 2000 presidential campaign, linking his tax proposals with Main Street prosperity and the nation's "hard-working families."
But it's hard to square that Middle America rhetoric with a new study which shows that fully one-third of this year's federal tax cut went to the richest 1 percent of taxpayers, and that the Bush tax cuts since 2001 have actually shifted the federal tax burden off the very rich and onto the middle class. The data, contained in and derived from a report by the nonpartisan Congressional Budget Office (CBO), shows how three years of tax cuts have squandered national wealth that could have gone to better purposes and reveals a yawning gap between White House packaging and tax reality.
Granted, the wealthy pay more taxes than other Americans, so it's inevitable that they'll get the biggest tax cuts. But these numbers are all out of proportion to the nation's actual tax burden. The top 1 percent of households pay about 22 percent of all federal taxes, according to the CBO, but got nearly nearly 34 percent of this year's tax cut. If the tax cut had been proportional -- if the top 5 percent of households had simply received the same percentage tax relief as those in the middle -- the Treasury would have saved $90 billion this year alone, according to Democrats on the Joint Economic Committee of Congress. That's money that could have been better spent at a time of rising deficits and war in Iraq.
This shouldn't come as any surprise to voters who have actually followed the tax debate since 2001. The White House has stressed highly popular middle-class components of its economic packages, such as a tax credit for children and a reduction in the so-called marriage penalty. But other components of the tax packages, which represent huge revenue losses, were targeted at the most affluent Americans, including steep cuts on income from corporate dividends and capitals gains.
One can imagine good reasons for a tax cut back in 2001, whether to stimulate a sluggish economy or to return part of the then-large federal surplus to taxpayers. But redistributing the revenue burden from the very richest Americans to those in the middle is not one that President Bush articulated at the time or that voters should accept today.
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