With the passage of the Bush tax cut, its opponents haven't slowed down their assault against it. Despite managing to slash it in half, the critics are still complaining.
Rep. Rosa DeLauro (D-Conn.) makes a perfect case study. Her response to a Bush radio address continued the familiar mantra of tax cuts for the wealthy and bemoaned the removal of the child credit increase for low-income families. Naturally, the rich Republicans are trampling the poor.
IRS numbers from 2000 helps. The top 5 percent (around $150,000+) of all taxpayers earned 35.30 percent of all taxed income and paid 56.47 percent of the taxes. In contrast, the bottom 50 percent (under $27,000) earned 12.98 percent but only paid 3.96 percent. The numbers reveal the disproportional nature of the tax code.
The rich do pay the majority of the taxes. Thus, percentage-wise they will benefit the most, as they should. Those shouldering the brunt of the burden should be granted the breadth of the relief.
That's fairness. Critics will say it's not, since they define fairness as equality. Okay, then the tax bill should be borne equally by the entire tax-paying population regardless of income level. The 2000 average was $7,581. My guess is several million low-income families won't go for it.
The critics also rail against the $350 billion tax cut "cost." This projection is flawed static analysis rather than dynamically projecting economic gains. Historical analysis shows that tax cuts increase tax revenues. For examples see the Reagan and Kennedy tax cuts. Increased revenues decrease the overall "cost." Brent Bozell recently wrote that tax cut costs are often grossly overestimated and poorly reported.
Tax revenues increase because capital is released for business and individuals. Economist Bruce Barlett notes that "reducing the wedge between what it costs employers to create jobs and the after-tax wages received by workers, it is possible both to lower the cost of employment and increase the reward to work simultaneously."
Short version: more money in more pockets translates to more taxable income. The Office of Management and Budget forecasts 800,000 new jobs will be created.
The poor are helped by the tax cuts. They're helped because job opportunities open up. Tax cuts don't put money in pockets -- jobs do. Tax dollars are taken from you after you've earned them; the cuts only give you back more of what you earned.
The latest whining surrounds the child credit increase for low-income families. This was stricken from the final package due to the liberals' insistence on a tax package cost ceiling. The one thing they wanted they didn't protest until after the vote.
Interestingly, the provision was put in the bill by Sen. Blanche Lincoln (D-Ariz.) who didn't even vote for it at roll call. Sadly, Republicans are rolling over like puppies after treats instead of resisting. It's welfare since those who don't pay taxes are getting a handout.
Democrats fear the cuts will reinvigorate the economy, something they can't afford in 2004. Economic indicators already point toward recovery and treasury secretary John Snow recently said tax cuts will accelerate it. The Democrats may need political CPR very soon.
Write to Jeff at mannedarena@yahoo.com
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