Molly Ivins June 26AUSTIN — You may have noticed the creepy, Orwellian language being used in the debate about the tax-cut proposals now in Congress. Republicans keep talking about "tax cuts for working families" while their whole bill is being written by $1,200 suits from Gucci Gulch representing corporate special interests. Beware of Republicans professing concern for the workers; their Senate bill now defines "middle class" as those making $110,000 a year. Hello? The median income in this country is slightly over $32,000 a year for a family of four. That means half of us are living on less than that — many a whole lot less. The first thing you want to notice about this tax cut is that we are once again cutting taxes so we can balance the budget. We have been down this road before. You may recall that when Ronald Reagan became president, the deficit stood at what he described as an appalling $50 billion. So in 1981, he cut taxes in order to balance the budget by 1984. By 1984, the deficit stood at $200 billion. Then, Congress and Reagan passed the 1986 tax-reform bill, which cut the top tax rate to 28 percent on the theory that this would balance the budget by 1991. By 1991, the deficit hit $270 billion. Bill Clinton came in and raised taxes on the tippy-top most rich without a single Republican vote, and the deficit has been falling ever since, thank you very much. But now Republicans are back in the saddle, and we are once again going to cut taxes to balance the budget by 2002. Lucy's holdin' that same old football for us again, Charlie Brown. The next thing you want to notice is that the great reform of the '86 tax act, written by Sen. Bill Bradley, has already been eroded. Bradley's idea was to tax all income at the same rate. Whether it came from a paycheck, an investment, capital gains, whatever — you paid the same tax on all of it. He shut down the tax shelters, the loopholes, all the gimmicks that had taxed unearned income at a lower rate than earned income (if you made your money picking up garbage, you had to pay more on it than if you made your money picking out stocks). Congress has been chipping away at that principle, a little here, a little there, all to benefit those friendly folks who write the big campaign checks. The Austin American-Statesman reports that the highest-income taxpayers now enjoy an 11 percent differential. That is, income earned from wages and salaries is taxed at a top rate of 39 percent, while investment income is taxed at 28 percent. And the big tax cut in the new Republican package would drop that to 20 percent. You tell me by what logic we should tax earned income at a higher rate than we do unearned income. I have no desire to deny those who save and invest the fruits of their investments; I just want them to pay the same taxes on it that everyone else does. Our next problem with the tax-cut proposals is whose numbers to believe.
Your various think tanks on both sides are ideologically tainted. Citizens for Tax Justice is generally pretty good — it played a strong role in the '86 tax fight — but these days, the Center on Budget and Policy Priorities is a sounder bet. It's a generally liberal outfit, but its statistical studies are well respected in academia. Also, its people do something the conservatives have always advocated: including as income not only wages and investment earnings but also government payments, like Social Security, welfare and food stamps. That gives you a better read on real income distribution. Another thing the center has done in its study that others haven't is to figure out the effects of the proposed tax cuts when they are fully in force. The congressional staff has calculated the effects only for the first five years, and the joker in this deck is that the House bill is structured so that most of the break in the capital gains reduction will come well into the next century. So, according to the Center on Budget and Policy Priorities, what we have here is a proposal that provides after-tax benefits to the richest 1 percent of Americans — those with incomes above $300,000 a year for a family of three — to the tune of $27,000 a year more than they have now. At the other end, families of three with incomes below $17,000 will end up with about $60 a year less than they have now. The richest 5 million families will benefit handsomely; the poorest 40 million families will actually lose money. Forget fair (Congress obviously has) — is this a smart move? The income gap between rich folks and poor folks in this country is already ungodly, and its devastating effects on the social fabric become clearer every day. Do we really want to make this worse? Now, listen carefully to the Republican justification of this sucker. Says the ineffable Sen. Phil Gramm: "This is a tax cut for taxpayers. If you don't pay taxes, you're not going to get anything out of this tax cut, and you shouldn't." Hello? As noted above, the rich are already paying less on their unearned income than everyone else is paying on earned income. The Republicans are even claiming that giving the $500-per-child tax credit to everyone would be "welfare." That's worse than brass-faced gall; that's offensive. What they're talking about is working-class families who qualify for the earned income tax credit, a good idea instituted by Reagan himself. What it means is that if both parents are working full time for minimum wage or a little over, when it comes tax time, they don't have to send much money to the feds because they get a tax credit. That doesn't mean they're not paying taxes. Their paychecks get docked just like everybody else's for Social Security, Medicare, etc. But according to the Republicans, these folks are not "taxpayers." *** Molly Ivins is a columnist for the Fort Worth Star-Telegram. COPYRIGHT 1997 CREATORS SYNDICATE, INC.
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