ELIZABETH SCHULTE reports on George Bush’s latest scam to line
the pockets of the super-rich with tax cuts.
GEORGE W. BUSH’S approval rating may be plummeting in opinion
polls, but his latest $70 billion tax break package is keeping him popular with
the people who matter most to him--the super-rich.
Bush is set to sign into law a bill that extends tax cuts on stock dividends
and capital gains--special federal taxes on assets and other income--until the
year 2010. The legislation, which passed both houses of Congress, originally
aimed at making the Bush administration’s 2001 and 2003 tax cuts permanent,
but Republicans settled for a further two-year extension.
In another case of politician doublespeak, the legislation’s sponsors
called it the “Tax Increase Prevention Act.”
“Let me make it perfectly clear: This legislation is good news for working
Americans and for the economy of this country,” crowed Sen. Trent Lott
(R-Miss.). But in reality, what’s “perfectly clear” is that
working people won’t benefit from these tax breaks.
Some 87 percent of the benefits of these tax breaks will go to households with
incomes above $100,000, according to the Urban Institute-Brookings Institution
Tax Policy Center. Fifty-five percent of the benefits will go to the tiny 3
percent of households that take in more than $200,000 a year. And if you make
more than $1 million a year, which adds up to just 0.2 percent of all households,
you’ll get nearly one-quarter of the benefits.
In total, 68 percent of households will receive no benefits at all. “These
tax cuts are very skewed to the wealthy,” said Len Burman, director of
the Tax Policy Center. “There’s hardly anything in the package that
favors anyone earning under $100,000.”
If your family falls in the 20 percent of households in the middle of the income
spectrum, your average tax cut would be $20. If your family rakes in $1 million
or more a year, your average tax cut is $43,000.
Another hidden break for the rich included in the legislation is a provision
that allows high-income individuals to convert regular IRAs to Roth IRAs, where
all the gains are tax-free. Currently, only households making under $100,000
are allowed to convert to the Roth IRA.
According to the Tax Policy Center, three-quarters of the benefits of the Roth
IRA proposal would go to households with incomes above $200,000. Almost 35 percent
of the benefits would go to those with incomes of over $1 million.
Another part of the legislation is an increase in the income level at which
households are exempt from the alternative minimum tax (AMT), a tax that was
established in 1969 supposedly to ensure that the wealthy pay their share.
And while Congress pushed through these tax breaks in the name of “stimulating
the economy,” a savings credit for low-income people expired last year
with hardly a peep. Lawmakers also failed to extend a deduction for college
tuition payments, which benefited middle-income workers.
The Bush administration’s tax-break bonanza for the rich is the latest,
worst example of a tax system that’s stacked against the majority. Over
the last three decades, Washington has increasingly shifted the burden of taxes
off Corporate America and onto workers and the poor.
This practice isn’t confined to Republican administrations, but happened
under the pro-business presidency of Bill Clinton as well.
As New York Times reporter David Cay Johnston concludes in his book The Covert
Campaign to Rig Our Tax System to Benefit the Super Rich--and Cheat Everybody
Else, “What surprised me more than anything was the realization that our
tax system now levies the poor, the middle class and even the upper middle class
to subsidize the rich...[T]he majority of Americans are being duped into supplementing
the incomes and extravagant lifestyles of the rich and powerful.”