When it comes to cutting taxes for the wealthy, President Bush can truly say, "Mission accomplished."
The richest 1 percent of Americans received about $491 billion in tax breaks between 2001 and 2008. That’s nearly the same amount as U.S. debt held by China — $493 billion — in the form of Treasury securities.
Do you want our government to mortgage more of our nation’s future to finance tax breaks for the rich?
Tax cuts have already helped the richest 1 percent — whose annual incomes average about $1.5 million — increase their share of the nation’s income to a higher level than any year since 1928 on the eve of the Great Depression.
Wall Street’s five biggest firms paid "a record $39 billion in bonuses for 2007, a year when three of the companies suffered the worst quarterly losses in their history" and are eliminating thousands of jobs as losses mount from the subprime mortgage market collapse, reports Bloomberg.
The International Monetary Fund says the United States is in the worst financial crisis since the Great Depression. Yet, we are borrowing money with interest to finance tax cuts for Wall Street executives.
For Americans below the top 1 percent, the tax cuts have been a giant swindle. The bottom 99 percent of taxpayers were left with a bill of $3.74 in debt for every $1 in federal tax cuts from 2001 to 2006, reports Citizens for Tax Justice. Only the top 1 percent came out ahead.
Meanwhile, the federal budgets for environmental protection and housing for the elderly have been slashed more than 20 percent since 2001, adjusted for inflation, the Community Development Block Grant budget is down 32 percent, and the lack of health insurance is an epidemic.
Most households aren’t even earning as much as they did in 1999, adjusting for inflation. But the 400 taxpayers with the highest incomes doubled their incomes between 2002 and 2005.
According to the latest IRS data, which excludes tax-exempt interest income from state and local government bonds, the richest 400 taxpayers reported an average $214 million each on their federal income tax returns in 2005 — up from $104 million in 2002.
As the Wall Street Journal observed, "It’s also important to remember that these figures don’t represent wealth or even lifetime earnings — merely income for a single year."
Thanks to tax cuts, it’s now common for the nation’s richest bosses to pay taxes at a lower rate than workers. The 400 richest taxpayers paid only 18 percent of their income in federal individual income taxes in 2005 — down from 30 percent in 1995.
"The drop in effective tax rates for the top 400 filers," the Center on Budget and Policy Priorities reports, "worked out to a tax reduction of $25 million per filer in 2005." It would take 673 average workers earning $37,149 a year to reach $25 million today.
While tax cuts help the superrich compete over who has the biggest submarine-carrying superyacht, Katrina survivors are being hit with foreclosures, and neglected levees and bridges around the country are a disaster waiting to happen.
Most of the provisions of the 2001 and 2003 tax cuts are scheduled to expire at the end of 2010. President Bush wants to make them permanent.
The richest 1 percent of households would receive nearly $1.2 trillion in tax cuts from 2009 through 2018, reports the Center on Budget and Policy Priorities.
How much is $1.2 trillion? More than all the debt accumulated in the nearly 200 years from George Washington through Ronald Reagan’s first two years in office. That’s before adding interest payments on the borrowed $1.2 trillion.
Tax cuts for the wealthy fuel rising inequality along with rising debt and neglect. Taxpayers with annual incomes above $1 million in fiscal year 2012, for example, would increase their after-tax income by 7.5 percent thanks to an average tax cut of $162,000. The poorest 20 percent of taxpayers would get an average tax cut of $45 — and decaying public services.
Democratic presidential candidates Hillary Clinton and Barack Obama promise to end the tax breaks for the wealthy. Republican candidate John McCain wants to extend them. What do you want?
Holly Sklar is co-author of "Raise the Floor: Wages and Policies That Work for All of Us" and "A Just Minimum Wage: Good for Workers, Business and Our Future." She can be reached at [email protected].