Tax Welfare For Billionaires II

Tax cuts for the very wealthy are draining America's budget more than the Iraq War
.....

I spent the morning of Tax Day reviewing studies on who pays what in federal taxes. If every taxpayer saw the same data, there would be a revolution.

Those are the opening lines of an article in The Atlantic Monthly by Jack Beatty, Tax Evasion (subscription may be required). Bush and the GOP have already openly declared war on working Americans with his tax cuts and Iraq war. The middle class and working oor are paying far more than their fair share of taxes, because Bush and the GOP are allowing wealthy corporations and wealthy individual Americans to evade their fair share of taxes.

A very interesting question is why Democrats are not making an issue of tax equity. I submit its because they don't give a damn about middle class Americans or the working poor.

Let's start with those who pay no federal taxes: eighty-two of the 275 Fortune 500 companies surveyed in one study. Each of these companies paid no taxes at all for at least one of the years between 2001 and 2003. Twenty-eight of them paid no taxes for any of the three years. The tax code mandates that corporations be taxed for 35 percent of profits, but in 2003 the "average effective rate" paid by the 275 companies was 17.2 percent. The worst offenders, the aerospace and defense industries, paid an average of only 1.6 percent of their profits in taxes. What's more, the eighty-two companies that avoided paying taxes received a total of $12.6 billion in refunds.

Tax legislation introduced by President Bush and passed by the Republican Congress invited this larceny, notably the changes clustered under the rubric "accelerated depreciation." That tax cut was justified on the grounds that it would stimulate investment in new plants and equipment. Instead, the twenty-five companies receiving the biggest tax breaks cut investment by 27 percent. Readers with the stomach for it can learn more at the Web site of one of the study's coauthors, Citizens for Tax Justice, a respected source of tax information and analysis.

David Cay Johnston's book, Perfectly Legal, laid out the case in extraordinary detail about how the wealthy avoid paying taxes. I recently wrote a diary about a Mother Jones interview,with Johnston Our Indefensible Tax System.

More from the Atlantic Monthly article:

In 2003 Bush cut the tax rate on unearned income to 15 percent. Half of American households benefited, right? That's Bush's implication.

.  .  .

So who gained from the cuts? The top 10 percent of households, who own 70 percent of all taxable stocks, and especially the top 1 percent, who own 29 percent. It gets worse: 54 percent of all income from capital gains and dividends goes to the top 0.2 percent, a group only slightly larger than the 30,000 who leave taxable estates. These folks--the ruling class--derive a third of their income from capital gains. They are taxed on that income at a lower rate then most of us pay on our wages. And we must also pay payroll taxes. They pay no payroll tax on their capital gains.

The cost?

The Republicans intend making all the Bush tax cuts--in income, capital gains, and estates--permanent in this session of Congress. The cuts have already cost the Treasury $1 trillion. Made permanent, over the next ten years they will cost an additional $2.8 trillion. If not offset by equivalent cuts in spending, the interest on the cuts adds another $492 billion; the cost of making Bush's cuts permanent thus comes to $3.3 trillion. The cost of the tax cuts already enacted, with interest on the borrowing that paid for them, adds another $3.3 trillion, bringing the total cost of the Bush tax cuts to the Treasury through 2016 to $6.5 trillion.

Beatty concludes:

And then, of course, there's the estimated $2 trillion cost of the Iraq War....

George W. Bush is a catastrophic president. And he will be in office for 900 more days.

Tax cuts are supposed to be one of the GOP's strongest issues. If Democrats give a tinker's damn about middle class or working poor Americans, why aren't they making this a core issue for the 2006 campaign?

Tags: economics, tax cuts, wealth (all tags)

Comments

5 Comments

Follow the money.

Yes, it's unfortunate that the process of politics in our country requires massive amounts of money in contributions and PACs to fuel campaigns. This makes the top contenders for the highest political offices necessarily beholden to (and often drawn from) elites in the top 10 percent of earners in america. Of course they have legislation enacted that benefits their best interests at the expense of everyone else. With a system that allows the rich to vote as often as they like with their assets, how is the typical citizen to feel anything but apathy?

Change the process: publicly finance campaigns, give free media time for all candidates (after all, the airwares are public assets) and you might get somewhere. Of course, you'll have to get the elites in government to vote against their own primary mechanism for maintaining their position. Good luck there.

by TimThe Terrible 2006-04-24 07:06AM | 0 recs
Precisely the problem

Of course, you'll have to get the elites in government to vote against their own primary mechanism for maintaining their position. Good luck there.

Spot on analysis Tim. Gerrymandering safe districts and keeping the money spigot open are what politicians do best. We aren't going to get any help from the current Supreme Court on either count as well. Opening up the political process to working class Americans is a fundamental dilemma of American politics.

by Gary Boatwright 2006-04-24 08:08AM | 0 recs
Whack-a-mole

But what is the solution? For me, the only reason I have moved from the realm of the disaffected independant to active Democrat is the development of the netroots. Here we have a truly democratic medium where citizens can come together and debate ideas based on their merits, and then (and most importantly) hold politicians of both major parties accountable for their actions through our support.

This is why the Ned lamont campaign is very big for me. If we can show that our support can push out a true elite/conservative/corporate shill within our own party we can start to move our party toward true representation of the interests of voters, and by extension maybe some day to autonomy from corporate interests. Of course, this only lasts as long as we have the internet, this open medium for democratic communication that has allowed us to organize so effectively, thankfully we don't have to worry about that... or do we?

It would be funny from a distance if it weren't so sickening. It's like we live in a gigantic game of whack-a-mole.. where the activists/populists/progressives/(add your own favorite label) come up with a good idea to bring fairness back into politics and the elite class slams a nice fat mallet right down on our heads every time.

by TimThe Terrible 2006-04-24 09:16AM | 0 recs
Re: Whack-a-mole

Join the crowd. I've been very active in my Orange County DFA and have checked in on several other local grassroots organizations. I also volunteered about 20 hours on Steve Young's campaign in the special election in CA-50. I'm still a declared Democrat on my voter registration, but I have repeatedly said that could easily change after the 2006 election.

The diary Chris just posted on an Emerging Democratic Narrative is hopeful, but I am not as patient as a lot of folks. If the power of the Democratic leadership continues to be held by DLC Dems and they continue to force candidates like Casey and Duckworth down our throat I'll probably take a route to change things from outside the Democratic Party. Democrats like Biden, Clinton, Lieberman and Emanuel are too extreme and reactionary for me to even give tacit support to.

Everybody has to make their own call about how to change the messed up political system we have, but as long as you're fighting the good fight that's all any of us can do. I'm keeping my hopes up that we are close to a political tipping point that will move America into a new left wing political consensus and conventional wisdom similar to FDR's New Deal.

I'm probaby terribly deluded, but it keeps me reasonably sane.

by Gary Boatwright 2006-04-24 09:55AM | 0 recs
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by yyy777 2006-09-07 06:21PM | 0 recs

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