MyDD :: Tax Welfare For Billionaires II

Tax cuts for the very wealthy are draining America's budget more than the Iraq War
.....

I spent the morning of Tax Day reviewing studies on who pays what in federal taxes. If every taxpayer saw the same data, there would be a revolution.

Those are the opening lines of an article in The Atlantic Monthly by Jack Beatty, Tax Evasion (subscription may be required). Bush and the GOP have already openly declared war on working Americans with his tax cuts and Iraq war. The middle class and working oor are paying far more than their fair share of taxes, because Bush and the GOP are allowing wealthy corporations and wealthy individual Americans to evade their fair share of taxes.

A very interesting question is why Democrats are not making an issue of tax equity. I submit its because they don't give a damn about middle class Americans or the working poor.

Let's start with those who pay no federal taxes: eighty-two of the 275 Fortune 500 companies surveyed in one study. Each of these companies paid no taxes at all for at least one of the years between 2001 and 2003. Twenty-eight of them paid no taxes for any of the three years. The tax code mandates that corporations be taxed for 35 percent of profits, but in 2003 the "average effective rate" paid by the 275 companies was 17.2 percent. The worst offenders, the aerospace and defense industries, paid an average of only 1.6 percent of their profits in taxes. What's more, the eighty-two companies that avoided paying taxes received a total of $12.6 billion in refunds.

Tax legislation introduced by President Bush and passed by the Republican Congress invited this larceny, notably the changes clustered under the rubric "accelerated depreciation." That tax cut was justified on the grounds that it would stimulate investment in new plants and equipment. Instead, the twenty-five companies receiving the biggest tax breaks cut investment by 27 percent. Readers with the stomach for it can learn more at the Web site of one of the study's coauthors, Citizens for Tax Justice, a respected source of tax information and analysis.

David Cay Johnston's book, Perfectly Legal, laid out the case in extraordinary detail about how the wealthy avoid paying taxes. I recently wrote a diary about a Mother Jones interview,with Johnston Our Indefensible Tax System.

More from the Atlantic Monthly article:

In 2003 Bush cut the tax rate on unearned income to 15 percent. Half of American households benefited, right? That's Bush's implication.

. . .

So who gained from the cuts? The top 10 percent of households, who own 70 percent of all taxable stocks, and especially the top 1 percent, who own 29 percent. It gets worse: 54 percent of all income from capital gains and dividends goes to the top 0.2 percent, a group only slightly larger than the 30,000 who leave taxable estates. These folks--the ruling class--derive a third of their income from capital gains. They are taxed on that income at a lower rate then most of us pay on our wages. And we must also pay payroll taxes. They pay no payroll tax on their capital gains.

The cost?

The Republicans intend making all the Bush tax cuts--in income, capital gains, and estates--permanent in this session of Congress. The cuts have already cost the Treasury $1 trillion. Made permanent, over the next ten years they will cost an additional $2.8 trillion. If not offset by equivalent cuts in spending, the interest on the cuts adds another $492 billion; the cost of making Bush's cuts permanent thus comes to $3.3 trillion. The cost of the tax cuts already enacted, with interest on the borrowing that paid for them, adds another $3.3 trillion, bringing the total cost of the Bush tax cuts to the Treasury through 2016 to $6.5 trillion.

Beatty concludes:

And then, of course, there's the estimated $2 trillion cost of the Iraq War....

George W. Bush is a catastrophic president. And he will be in office for 900 more days.

Tax cuts are supposed to be one of the GOP's strongest issues. If Democrats give a tinker's damn about middle class or working poor Americans, why aren't they making this a core issue for the 2006 campaign?