Taxation misrepresentation

Taxation misrepresentation
Jenny Brown
March 2001

As George W. Bush promotes his "tax relief" package in counties which safely supported him,outrage has been building over what the tax cuts would mean.

"The riches ten percent," stated columnist Molly Ivins on March 7, "get 60.3 percent of Bush's tax cut, leaving a whopping 37 percent for the other 90 percent of us." Between 40 and 45% of the tax cut goes to people making more than $373,000 a year.

When the income tax was won in 1913, after decades of organizing, only the richest 5 percent of households paid any income tax.. According to the Labor Party Press, "The workers and farmers who fought for the tax saw it as a good way to take back some of the robber barons' ill-gotten gains." (May 1999). Even during World War II, the average income tax bitefor workers was 4%. Now, loopholes reign and the brunt of income taxes are paid by workers who are by no means affluent.

Meanwhile, the richest have seen their taxes drop like a bomb. Under Reagan, the tax rate for the richest was dropped from 70% to 50% Then in 1986 the top rate was pushed down to 28 percent. Under Bush the first and then Clinton, it rose to 31% and then 35%. Bush's plan will drop it once again.

But the most pernicious--and costly--part of Bush's tax package is the abolition of the estate tax, which was first enacted in 1916. The estate tax repeal was passed by both houses of Congress last year and vetoed by Clinton in August.

It's ironic that the Republicans, who are always yammering about "self-made men" and how people should not get handouts, want to abolish the estate tax. The estate tax is one of the few taxes which actually effects the wealthy anymore. It means that if daddy had a bunch of money (over $675,000 in 2000 for an individual; or over $1.35 million for a couple) he can't give all of it to you--just most of it. What? You might have to get a job yourself? I thought the Republicans were for this. But not when it's their own kin involved.

They make it sound like it's a dire "death tax" which prevents people from giving inheritances to their children. In fact, the tax for inherited wealth over $675,000 is supposed to be 55% percent, but it only amounts to around 17% in real life. And the exempt amounts will rise to $1 million for an individual and $2 million for a couple in 2006. The tax also encourages "charitable giving," another Republican favorite. This is a very popular way to stow family wealth: create a family foundation and avoid most of the tax and be all philanthropic about the things YOU think need funding, rather than the working public, who created the wealth in the first place, having a say in what it needs.

According to United for a Fair Economy, the Congressional Office of Management and Budget expected the federal estate tax to raise $30 billion for the public till in 2000. "Under the current proposal for repeal," United for a Fair Economy states, "We'd lose $294 billion from 2002 to 2011, and three-quarters of a trillion dollars in the second 10 years. Working people will pay for this tax cut through either cuts in services or an increased tax burden."

Bush has been concealing the estate tax repeal--so unpopular on the face of it--in among his other tax changes. But even without the repeal of the estate tax, the richest 1% still get 31.3 percent of the tax cut.

Bush has been selling the cut by highlighting the one or two hundred dollars middle-income working families will save on their taxes. But in his Rose Garden photo opportunities and stump speeches he fails to mention the thousands of dollars these same families will lose due to further cuts in federal programs such as college funding, Medicare coverage, increased service on the national debt, the cutbacks in VA hospitals, and then the priceless things like childcare and Headstart, worker health and safety, food inspections, highway safety, environmental protection and on and on. The effect of these cuts cannot be bought back with one or two hundred dollars on the "private market."

Most Americans haven't fallen for this scam. For example, a majority of voters voted against Bush, even though his only recognizable program was his tax cut, and in polls, majorities say they would prefer adequately-funded federal programs to another income tax cut.

A group of millionaires has even come out for the estate tax. Supporting Clinton's veto last August, computer CEO Martin Rothenberg stated: "Without the estate tax, a child could inherit millions, even billions of dollars--much of it accumulated tax-free in appreciated stocks, bonds and real estate--without paying a penny in taxes. Without revenue from the estate tax, there would be an even greater burden on taxpayers who never inherit a dime." The millionaires group placed an ad in the New York Times supporting the estate tax.

None of these measures is what we need, of course. During Reagan we were trying to defend the War on Poverty and parts of the New Deal; now we're now trying to preserve laws that were passed more than 80 years ago, as a result of the organizing of the Industrial Workers of the World and the threat of the revolution in Russia and other parts of Europe.

The top tax rates in other countries--won as a result of working people demanding what is rightfully theirs--should show us that it's possible to impose more taxes here: Japan, France, Germany, Canada and Italy all have top tax rates over 50%. In Japan it's 65% (1994 figures.)

The Labor Party, which was founded in Cleveland in 1996 to oppose the anti-worker policies of the two major U.S. parties, proposes moving forward by slapping a 100 percent tax on that portion of executive salaries exceeding 20 times the average workers' pay in that corporation.

For more information on the Labor Party, see www.igc.org/lpa or call 375-2832.

For more information on United for a Fair Economy, see www.ufenet.org.