It’s Official: Tax Cuts Help the Rich

Say you are an average person making a little more than $10 million a year. Thanks to the three tax cuts of the Bush administration, your 2003 tax bill was more than $1 million less than it had been in 2002, according to a study by the New York Times.

If you happen to be making more than $26 million, you are in the same tax bracket as the fellow struggling along on between $200,000 and $500,000 a year.

On the other hand, if you are in the low six figures, your tax cuts may have been gobbled up by the Alternative Minimum Tax. Sorry about that, but you are not alone. The ATM affected 3.5 million people filling last year and will hit 19 million this year, including some with incomes as low as $30,000. That is, unless Congress restores a law that limited the ATM’s effects until now. Given, what is going on in Congress at the moment, it seems unlikely that such a law will save us.

The Republicans in the form of Rep. David L. Camp of Michigan claimed that the investment tax cut would help people making less than $100,000 a year. “Nearly 60% of the taxpayers with incomes less than $100,000 had income from capital gains and dividends,” the Republican’s chosen spokesman on this issue said on the House floor.

Not quite. IRS data shows that among the 90% of all taxpayers who made less than $100,000, dividend tax reductions benefited just one in seven and capital gains reductions one in 20. On the other hand, more than 70% of the tax savings on investment income went to the top two percent, or 2.6 million taxpayers.

If the investment tax cuts are made permanent, the government will lose $197 billion over 10 years. That is fine with the Republicans because they say it will make more money available for investment which will create jobs. This is known as the trickle down theory, a fav of President Reagan. Unfortunately, the Congressional Budget Office says not so. If the tax cuts allow you to make as much from a smaller investment, most people would not invest more. And, if they did, they would more than likely invest overseas, which would create jobs, just not jobs here.

Maybe old Harry Truman was on to something when he said, “If you want to live like a Republican, you should vote Democratic.”

Tom Gordon

tsg0008@sbcglobal.net