Nix the Tax Cut




P

resident
Bush’s proposal of a huge tax cut for the wealthy, at a time
when the economy is in a deep hole, is too fantastic to believe.
Coming on the heels of President Bush’s $1.35 trillion tax
cut two years ago, which bestowed 40 percent of the tax breaks on
the wealthy, additional tax cuts will only increase the gap between
the rich and the poor.


Under
Bush’s new tax cut plan, 58 percent of the benefit goes to
those making over $100,000 a year; 35 percent goes to those making
over $200,000. The jackals argue that a cut is only “fair”
and that “double taxation” of dividends is unjust. True,
the rich pay more taxes, but why is this unjust?


In
1998, the top 1 percent paid 35 percent of federal taxes, while
the bottom 40 percent paid 1 percent. Some argue there is no way
a tax reduction won’t benefit the rich because they pay the
biggest percentage of taxes. But that’s not the whole story.


While
the taxes paid by the richest 1 percent increased by 48 percent
from 1979 to 1997, their income increased a whopping 157 percent.
CEO pay increased from 96 times the average workers pay in 1990
to 458 times in 2000. Meanwhile, the assets of households earning
less than $25,000 actually dropped between 1995 and 1998. On the
basis of fairness, the rich should be paying three times more taxes
than they do now.


Republicans
push the idea that everyone should pay the same taxes no matter
how much they benefit from the system. Under this policy, George
Bush Sr. increased the number of people living in poverty by 6.5
million and George W. Bush increased those living in poverty by
1.3 million during his first year in office. At the same time, the
wealth of the top 1 percent of U.S. households grew to equal the
wealth of the bottom 95 percent. From 1997 to 2000, the wealth of
the Forbes 400 grew at a rate of 6,602 times the daily minimum wage.
At the same time, Republicans vehemently opposed increasing the
minimum wage and Clinton curtailed welfare assistance.


Republicans
have steadily eroded progressive taxes. Over the past 20 years,
the tax burden on the wealthy fell and will decrease even further
with Bush’s tax cuts. The inheritance tax was repealed for
the top 2 percent of taxpayers. The wealthiest can now pass along
their estates without paying any taxes, leading to the creation
of rich dynasties—something Americans have assiduously avoided.


To
justify the current tax cut, the jackals argue that half of all
households will benefit because they own stocks. The president cites
an average $1,000 benefit. If one person has $1 million and the
other zero, the average is $500, 000, a meaningless average. The
arguments about average tax cuts don’t mention that 64 percent
of the benefits go to the top 5 percent of taxpayers.


The
jackals claim the wealthy will invest in new plants and equipment
to stimulate the economy. But the problem with the economy is overcapacity—manufacturers
are using less than three-quarters of their current capacity. Why
would the wealthy invest in new plants and equipment?


A
tax cut will do little except give the wealthy more money to spend
and leave us with the biggest deficit in history. Rather than cutting
more taxes, previous tax cuts should be rolled back. We need to
increase the minimum wage, invest in community projects, rebuild
badly deteriorated schools, establish universal healthcare, create
national broadband access, untangle the transportation mess, and
invest in countless other projects akin to the public benefits that
followed WW II. Such moves will begin to close the gap between the
rich and the poor in this country.







Don
Monkerud is an Aptos, California-based columnist and author .