Allen Wrench: You're on the wrong thread. But then again, the only thing going on over at your thread these days is a lot of idle chit-chat from the prostate-challenged bunch.
In order to give you something to sink your teeth into, even the Wall Street Journal has now exposed the Bush tax plan for what it is: A big break for fat cats.
Affluent Tax-Payers Would Gain
Most From Bush's Tax-Cut Plan
2/7/01
By JACOB M. SCHLESINGER and LAURA HEINAUER
Staff Reporters of THE WALL STREET JOURNAL
WASHINGTON -- When President Bush launched his public-relations campaign to sell his $1.6 trillion tax cut this week, he gathered a group of middle-class families at the White House and talked of how much they would gain from his plan -- $1,100 a year for one couple he introduced, Paul and Debbie Peterson. Asked who was there to represent those in the top tax bracket, Mr. Bush replied to laughter: "Well, I beg your pardon. I'm representing [them]. I got a little pay raise coming to Washington from Austin."
Here is what the president didn't say: If his full income-tax cut had been in place in 1999, the most recent year for which he has released his tax returns, he and Laura Bush could have gotten a break 20 to 60 times that of the Petersons. Vice President Cheney and his wife, Lynne, meanwhile, could have gotten a break in 1999 of more than a quarter of a million dollars.
"The family that makes $40,000 to $50,000 pays relatively little income taxes because of exemptions and deductions and all that, and so doesn't get a big cut," said Sheldon Cohen, a tax lawyer and former commissioner of the Internal Revenue Service, who, along with Washington-area accountant Beverly Potter, calculated the potential tax savings of Messrs. Bush and Cheney at the request of The Wall Street Journal. "The Washington lawyers, the executives who make $1 million or more, are going to get the big cuts," he added.
That contrast -- between how the tax plan affects the Bushes and Cheneys and the Petersons -- highlights a big challenge the new president faces as he attempts to sell his tax cut and, more broadly, his "compassionate conservative" agenda to Congress and the American public. From tax cuts to school vouchers to privatizing Social Security, Mr. Bush emphasizes potential benefits to lower-income and middle-class families. But critics say those policies happen to benefit more conventional conservative constituencies such as the affluent -- perhaps far more than the middle-class families put on display at the rallies.
Having all but conceded to Mr. Bush the need for a big tax cut this year, Democrats are now focusing their attacks on the relative benefits between the rich and everybody else in his plan. "If you make over $300,000 a year, this tax cut means you get to buy a new Lexus," Senate Minority Leader Tom Daschle of South Dakota asserted earlier this week. "If you make $50,000 a year, you get to buy a muffler on your used car -- that's the difference."
Polls show Americans mixed on the desirability of tax cuts for all families, including those at the top of the pay scale. In a Wall Street Journal/NBC survey last month, 46% favored an income-tax cut "for all taxpayers," while 44% said the "better approach" was "targeted tax cuts to help some people pay for specific needs."
Even some Republican lawmakers acknowledge that the tax breaks for the richest families may have to be scaled back in order to win congressional approval. "We might have to be flexible in that regard if we want to get bipartisan support," says Maine GOP Sen. Olympia Snowe. She floats the idea of reducing the full cut in the upper-income bracket. Mr. Bush wants to drop that to 33% from 39.6%; she suggests 37% to make sure the cuts "go to who needs it the most."
As it is currently crafted, the Bush plan does include important breaks for many lower- and middle-income families. Mr. Bush says that a family of four will get, on average, a $1,600 annual cut. For married couples, the first $12,000 of income would be taxed at 10%, down from the current 15%. The credit for children would be doubled to $1,000 from $500.
Packaged in a certain way, the tax plan looks like it helps lower-income families more than top earners. Bush economists say the tax plan would increase the share of total income taxes paid by the top earners. And as a percentage of their income taxes paid, lower-income Americans do get the steepest cuts. Families making $40,000 or less would see a reduction in their income-tax bill of 20% to as much 100%, according to materials distributed by Mr. Bush during the campaign. Those earning more than $200,000 would get less than 10%.
For example, the $1,100 savings for the Petersons would wipe out their income-tax liability -- a "100% cut in their income taxes," Mr. Bush said. The Bushes -- who made substantial money in 1999 not just on salary but also on interest and other investment income -- would save somewhere between $20,000 and $60,000, according to Mr. Cohen and Ms. Potter. But that would still leave them with a tax bill of around $400,000.
"I'm going to give one person back everything that they paid in overpayment; and I'm giving the president back 10% of what he paid in," Lawrence Lindsey, head of the White House National Economic Council, said in an interview this week, describing the deal as less favorable to someone of Mr. Bush's financial assets . "If anything ... he'd be the one to complain."
But the tilt of Mr. Bush's tax cut is skewed more toward the rich by his proposal to repeal the estate tax, which imposes a levy as high as 55% on estates owned by couples worth more than $1.35 million today and $2 million in 2006.
The president didn't mention that plank Monday when talking about the benefits to the families in attendance. Financial-disclosure forms he filed during the campaign suggest that, if his estate remains at least at its current value when he dies, his heirs could save between $6 million and $12 million from the proposed repeal. Mr. Cheney's forms suggest a savings to his heirs of between $10 million to $45 million.
Only about 2% of all estates in the country face the estate tax and thus would benefit from repeal. But financial-disclosure forms suggest that, in addition to Messrs. Bush and Cheney, as many as 14 of their 17 cabinet members may be wealthy enough to gain from eliminating the tax.
In defending the distributional impact of estate-tax repeal, Mr. Lindsey reverted from compassion to conservatism. "This is America, and you assume that if you earn the money, and you earn it legally, that it's your money," he says. If a cabinet member "goes to a casino ... and loses it, he has no death tax. If he saves the money and tries to pass it on to his children, half of it is taken away from him," Mr. Lindsey said. "I want to hear the logic on why that's good." |
