A New Tax Cut
PRESIDENT BUSH is getting ready to
sign his fourth tax bill in four years. Mr. Bush
came into office at a time of budget surpluses
proposing an audacious $1.6 trillion tax cut over 10
years. The surplus long since evaporated, the
country is at war -- but with this latest bill Mr.
Bush and his enabling Congress will have cut taxes
by $1.9 trillion, and that doesn't include the added
costs of interest on the mounting government debt.
Quite an achievement, really, unless you worry about
the impact -- which hardly anyone seems to be doing.
This latest cut, which ended up with a price tag
of $146 billion, most of it to be paid in the next
five years, is the outgrowth of lawmakers' bogus bid
to look as if they had a modicum of fiscal
responsibility on the last go-round. Then, they
insisted that the tax package couldn't cost more
than $350 billion over 10 years. They achieved that
illusion by jury-rigging the bill to have its most
popular tax breaks expire this year -- limiting the
ostensible cost while knowing full well that their
weak-kneed colleagues wouldn't dare risk looking
like tax-hikers with an election looming.
The inevitable extension came about in a
particularly cynical and anti-democratic way.
Leaders dispensed with bothersome rituals such as
hearings, committee markups, floor debate and
amendments. They hijacked a tax bill that was
supposed to help the working poor and that therefore
had been languishing in conference for months. They
recalibrated it so that the working poor got the
tiniest slice of the benefits, and then they took it
directly to the floor, where it could not be amended
-- no requirement, for example, that the cuts be
paid for. In the Senate, just three brave souls
dared withstand the pressure: retiring Democrat and
deficit hawk Ernest F. Hollings (S.C.) and two
moderate Republicans, Olympia J. Snowe (Maine) and
Lincoln D. Chafee (R.I.). John F. Kerry wasn't so
courageous; he supported the tax-cut extensions.
And was it, as advertised, a middle-class tax
bill? Certainly, middle-class families get help.
According to an analysis by the Brookings-Urban
Institute Tax Policy Center, taxpayers earning
between $50,000 and $75,000 will receive an average
tax benefit of $353 next year as a result of the
bill. Taxpayers earning between $200,000 and
$500,000 will see their average tax burden fall by
nearly $2,400. More than half of the bill's benefits
go to taxpayers earning more than $100,000 a year,
although they account for fewer than 13 percent of
all taxpayers. If all of this were without cost, it
wouldn't much matter. But the tab will come due down
the road. And those who will end up having to pay
are, more likely than not, the children of the
middle class that is the supposed beneficiary of
this election-year pandering.
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