Molly Ivins June 25

AUSTIN, Texas — Well, as they used to say in 'Nam, there it is. Congress just took part of our budget surplus and gave it to the rich folks as yet another tax cut just for them. They did the same thing last year, only this time, they've added insult to injury.

In addition to leaving in a special tax cut for the super-rich, Congress added a new capital gains tax break by reducing the amount of time investors have to hold stocks and bonds to qualify for the best capital gains tax rate. According to a New York Times report on legislation that would revamp the Internal Revenue Service, this holding period would go from 18 months to 12 months. When investors don't have to hold their stocks and bonds as long, it discourages long-term investment and encourages speculation, which is not only unfair but stupid.

However, looking on the bright side, if you have more than $17 million to leave your happy heirs, there's good news for you. It seems there was a mistake — oops — and as a consequence of this little error, those with estates of more than $17 million will each save $200,000 in estate taxes, costing the Treasury $880 million in revenue over the next 10 years.

After the Treasury Department noticed the mistake, officials moved to fix it, but lo and behold, Rep. Bill Archer, R-Houston, insisted on leaving the inadvertent tax break in place.

This is especially discouraging because Archer had been showing symptoms of being a good guy. He put up a noble effort to get rid of the ADM subsidy — that's the ethanol subsidy that exists because Archer-Daniels-Midland (no relation to Bill) is such a big campaign contributor. Despite Bill's best efforts, this outrageous piece of corporate welfare was extended through 2007 as part of the new highway legislation.

Concerning the little "error" in favor of the $17 million-plus crowd, Archer spokesman Ari Fleischer told The New York Times: "When the Democrats controlled Congress and drafting errors worked against the taxpayers, the Democrats let them stay in the law. Now, when one works against the government and for the taxpayers, we're in no rush to correct it." Well, sure, that makes everything right and fair. Doesn't it?

Archer was also behind the reduced waiting period to cash in on capital gains, and now, he and House Speaker Newt Gingrich want to lower that tax even more than they did last year, from 20 percent to 15 percent. What this means is that earned income (the kind you work for) will be taxed at a higher rate than unearned income (the kind you get by clipping coupons), thus making life easier for the rich and harder for the rest of us — who will, of course, be bearing an even larger share of the total tax burden.

The rationale for cutting capital gains taxes is that it encourages investment. As you know, the stock market is already (in Fed Chairman Alan Greenspan's phrase) "irrationally exuberant." What else can these guys do to set up a stock market crash?

As though this weren't enough mischief for one week, the House of Reps voted to repeal the entire tax code on Dec. 31, 2002. Not, you understand, that they have anything to replace it with or any earthly idea of how to do so. Majority Leader Dick Armey wants a flat tax; Archer wants a national sales tax; Steve Forbes wants it all on a postcard. These folks are full of simplistic schemes.

To vote to repeal the entire tax code four years in the future without any plan for how or what to replace it with is so amazingly irresponsible, it's sort of hard to take in. This is the Holly Golightly approach to taxation.

There is one simple thing about taxes to keep in mind: Taxes are complicated. Not as complicated, I grant you, as the gazillion-page tax code we have now. But before you buy into some simplistic nostrum, think about it a while. Income taxes, property taxes, sales taxes, corporate franchise taxes, business taxes, royalty payments, earned and unearned income, progressive vs. regressive taxes, import-export taxes, payroll taxes, value-added taxes — now think of a system that's both equitable and simple.

One of the very few simple facts about taxation in this country is that for almost 50 years now we have gradually shifted more and more of the tax burden away from corporations and onto individuals. Guess why. Almost two-thirds of the money in American politics comes from organized corporate special interests, and believe me, they get what they pay for. If I were you, I would not let a Congress bought and paid for by corporate special interests rewrite the tax code.

Which brings us, naturally, to the latest misadventures of campaign finance reform. Just last week, we saw a lovely example of how to defeat a bill without admitting you want to kill it: The Senate loaded up the tobacco bill with all sorts of extraneous garbage — repealing the marriage tax was one little beauty contributed by Phil Gramm — and then the Republicans voted against the bill because, they said, it was so loaded up with extraneous amendments. Cute, eh?

Now, the House — led by Gingrich, who definitely wants to kill off campaign finance — is debating 258 amendments to campaign finance. By the time they're through, it could a pet protection act.

Molly Ivins is a columnist for the Fort Worth Star-Telegram. To find out more about Molly Ivins and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate web page at www.creators.com.

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