New tax cuts benefit richBINGO!
May 12, 2006
Plagued with a cratering job approval rating, congressional Republicans - whose claim to fame is tax-cutting - moved this week to give voters more: More deficits, more gimmicks, more fiscal irresponsibility and $70 billion more in tax cuts.
How happy that makes you probably depends on how rich you are. If you earn $50,000 a year, your tax cut will be roughly $47. If you make $1 million a year, it will be $42,000.
Showering the richest with tax cuts while leaving Washington strapped for money to pay for such things as the war in Iraq and shoring up Medicare and Social Security is the work of politicians whose eyes are riveted on the next election rather than the government's balance sheet.
Champions of the tax cuts will credit them with stimulating a surging economy that will increase tax revenue. Don't bank on it. Tax cuts can stimulate a sluggish economy. But there is scant evidence that they ever generate enough growth to pay for themselves. Their impact on the massive global economy is marginal, particularly when lashed to the drag of persistent federal deficits and borrowing.
It took three, count 'em, three budget-busting tax cuts to have even a marginal impact on our economy. The jobless rate hasn't budged downward in months, if not years, gas prices are soaring, inflation is STILL a problem, the Fed is raising interest rates yet again, your mortgages are getting more and more expensive while your house's value is flattening out.
Republicans bank on tax cuts to win votes. But that formula will lose steam as more voters come to realize that the cuts go overwhelmingly to the affluent few while the debt - much of it held by foreign nations - burdens us all.While the rich outsource our jobs and their money. Don't believe me? Check out how many hedge funds have moved their bases of operation to the Caymans or Bermuda. Not only for the tax haven this creates, but for the simple fact that they can play the currency exchanges. When Bush took office, you could buy an euro for about $0.80. Now it will cost you about $1.25.
That's a 56% decline in the value of the dollar. Any questions?
Major provisions of the bill passed this week in Congress will extend the reduced 15-percent tax rate on capital gains and dividends for two years to 2010, and patch the alternative minimum tax for one year.Read that again: the budget deficit is understated annually by $20 billion dollars. Let's say the budget deficit is $300 billion annually. You're adding another 5-10% of it without even a single dollar being spent.
The AMT has to be reined in. Intended to ensure that millionaires couldn't skillfully use deductions to avoid paying any income tax, it now inflates the tax bills of people earning as little as $75,000 a year. Particularly hard hit are taxpayers who are married with kids, own a home and pay high state and local taxes. That's Long Island writ large.
Congress should fix the AMT permanently. But the temporary patch jobs allow officials to count the revenue an unattended AMT would generate in future years. That reduces the size of projected deficits, even though the year-to-year patches mean that revenue will never materialize. Dealing honestly with the AMT would mean foregoing other tax cuts, which Washington is unwilling to do. In fact, there's another unaffordable $20 billion tax cut in the works.
Cutting taxes willy-nilly when Washington is deep in debt and costs are soaring makes as much sense as asking for a pay cut when you're borrowing to buy gas and for a new roof. Something to remember come November.Could not have said it better myself.
snarkasm, snarcasm, snarky