Monument
to greed
by Gene Lyons
November 24, 2004
After eking out a three-point election win, President
Bush claimed a mandate and announced plans
to "reform" the tax code and Social Security.
Almost needless to say, those reforms conform to the
reverse-Robin Hood ideal of giving to Bush’s
wealthy benefactors while taking from wage-earners
everywhere. I say "almost" because, hypnotized
by the president’s folksy drawl, many don’t realize
that they’re about to be conned out of even the
minuscule tax cuts Bush delivered during his first term.
As described in quasi-official leaks to The Washington
Post, Bush’s tax plan reads like a scheme
crafted by Scrooge McDuck. No wonder. Self-pitying
tycoons have long funded tax-sheltered GOP
think-tanks like the Heritage Foundation and
the American Enterprise Institute dedicated to the return
of Gilded Age values. Their reward the White
House euphemistically dubs the "ownership society."
The Bush/McDuck plan is a monument to untrammeled
greed, a veritable swimming pool filled with
bullion for trust-fund inheritors like Paris
Hilton and the president himself to bask and wallow in.
Without exception, each of the White House’s planned
"reforms" would have the effect of shifting
the federal tax burden away from the rich and
toward the salaried middle class. It favors wealth
over work at every turn.
If Bush gets what he wants from the GOP Congress,
a secondary benefit would be to raise income
taxes in the wealthier "blue" states (most of
which already send more to Washington than they get
back in federal spending) even more than in the
"red" states that supported him. Nifty, huh?
Oh, and yes, millions of salaried workers would stand to lose employer-sponsored health insurance in the bargain.
Think I exaggerate? According to the Post’s Jonathan
Weisman and Jeffrey H. Birnbaum, the White
House has quit flirting with utopian daydreams
like a one-size-fits-all "flat tax" or national sales tax
(probably because at an estimated 25 to 28 percent,
the latter might have sparked rebellion in
Wal-Mart checkout lines). Instead, the plan is
to accomplish similar goals indirectly.
Here’s the straight dope as the Post reported
it. According to Treasury Department officials:
"The president will pursue a tax system where
all income—whether from wages, dividends, capital
gains or interest—is taxed only once. That would
mean eliminating taxes on dividends and capital gains
paid out of fully taxed corporate profits. Most
investment gains are currently taxed at 15 percent.
"The administration will also push hard for large
savings accounts that could shelter thousands of dollars
of deposits each year from taxation on investment
gains, according to White House economic advisers
who have been involved with the planning. And
any tax reform, according to Treasury Department
officials, would likely eliminate the alternative
minimum tax, a parallel income tax designed to ensure
that the rich pay income taxes but one that increasingly
ensnares the middle class. "To pay for those
large tax cuts, the administration is looking
at eliminating both the deduction for state and local taxes,
and the business tax deduction for employer-sponsored
health insurance. That would raise nearly
$926 billion over five years, according to White
House and congressional documents."
Anybody who’s ever filled out an itemized IRS
Form 1040 can read the cards. With the estate tax
(excuse me, "death tax") on multimillion-dollar
inheritances already gone, an heiress like the
aforementioned Paris Hilton, for example—who,
until discovering" The Simple Life" on FOX,
lived off dividends and interest from the family
trust—might literally end up paying less income tax
than her hairdressers and bodyguards. So might
everybody in the Bush clan.
Likewise, investors and real estate and stock
speculators who live off capital gains could avoid
income taxes almost altogether. High-salaried
executives, physicians, professional athletes and
others who earn considerably more than they spend
would be able to shelter much of their
income in tax-free accounts.
Ordinary working people would be left holding
the bag. So you’d no longer have to pay income tax
on savings account interest. Big deal. Eliminating
the state and local tax deduction would cost most
taxpayers many times more.
As an added political benefit, residents of "blue"
states like New York, Pennsylvania and California,
who pay far higher state and municipal taxes
than citizens of, say, Florida and Texas (which have no
state income tax), would pay considerably more
than their "red" state counterparts. Readers who
doubt me should dig out their own 2003 tax returns
and do the arithmetic. For most, it ain’t pretty.
Given the national crisis in health care funding,
it’s almost beyond belief that even Bush would eliminate
deductions for employer-sponsored group health
insurance, a potential boon to insurance companies
selling far more expensive—and profitable—individual
policies, but a big blow to everybody else.
It should be axiomatic: Any time a politician
mentions "family values," get a firm grasp on your wallet.
• Free-lance columnist Gene Lyons is a Little
Rock author
and recipient of the National Magazine Award.