Feast And Famine
President Bush's tax plan tosses scraps to the poor.
Thursday, March 15, 2001
Though George W. Bush''s tax proposal sashayed through the House of Representatives with ease, it will need extraordinary amounts of makeup and soft lighting to pass in the Senate--and with the public--for anything other than what it is: a wildly ambitious money-grab for the richest of the rich.
In the weeks leading up to the House''s consideration of the proposal, the usual well-scripted news conference charades reached an unprecedented level of spectacle. In high Ed McMahon fashion, Bush handed giant "checks" for $1,600 to what he calls "real, live people," grinning citizens dragged out for the occasion like Wheel of Fortune contestants. Never mind that 90 percent of American households will get less than that--spin the wheel.
The Democrats didn''t slack, either: Senate Minority Leader Tom Daschle went so far as to dirty his hands on used auto parts to illustrate the point that Bush''s plan will buy a new Lexus for anyone pulling in $300,000 a year, and a muffler for someone making $50,000. Daschle''s numbers are striking. Bowing to the deities of American politics (middle-class families of four) as Democrats have for the last eight years, he chose to neglect mentioning those for whom a new muffler--or a car to put it on--is a big deal: the poor, whose ranks have swelled throughout the Clinton boom years.
It''s easy to forget, when unemployment has dropped precipitously, that most of the new jobs created at the lower tiers have been low-wage service and manufacturing positions, the latter not in the unionized defense and auto plants of yesteryear, but in sweatshops. I asked Bob McIntyre of Citizens for Tax Justice (CTJ) in Washington, who has extensively analyzed the Bush tax plan, what the tax cuts will do for these working poor.
"Zero," he said. As hard as Bush tries to spin it, an income-tax cut will do next to nothing for most of those stopped at that infamous "tollbooth to the middle class" for the simple reason that the poor pay almost no income tax as it is. A couple with two children don''t begin paying income taxes until they earn more than $28,215. They do, however, pay substantial amounts in Social Security and Medicare payroll taxes, which are completely regressive, and which will remain so under the Bush plan.
In a radio address at the beginning of the month, Bush waxed hypothetical: "Picture a diner in one of our cities," he said--let''s pretend it''s Seaside--and a waitress serving coffee and toast to a wealthy lawyer, inexplicably slumming at a low-rent, no-espresso-served-here kind of joint. Both have two kids. The waitress earns $25,000, the lawyer 10 times that amount. We can flesh the picture out a bit by giving the lawyer a home in the clean mountain air of Cañada Woods and the waitress a cramped apartment in Marina. The lawyer''s kids go to York School, the waitress'' to public school. The lawyer drives the proverbial Lexus; the waitress rides the bus and has no use whatsoever for Tom Daschle''s muffler. You can guess whose kids have health insurance.
"For the waitress," Bush boasted, "our plan will wipe out her income-tax bill entirely." Sounds great, except that it''s more than likely she didn''t have to pay income taxes in the first place. If she happened to be single and spent just $100 a month on child care, she would get back less than $200, which might almost buy a month''s health insurance for her kids. The lawyer would get back at least $3,100, enough for a weekend''s shopping spree in Palm Springs.
The Bush proposal''s sinister beauty is that it will benefit everyone but those who need help the most, though the goodies don''t really start flowing in unless you''re already truly loaded. According to CTJ''s analyses, while the bottom 60 percent of the country gets 13 percent of the tax cuts, about $227 each, the top 1 percent, whose average income was $915,000 in 1999, will get 43 percent of the booty. Their average tax break would be $46,000. Bush himself, who in his game-show-host mode chortlingly admitted to being the only representative of the upper tax bracket onstage, would see a windfall of $100,000, McIntyre estimates, if his 1999 earnings of $1.4 million in interest, dividends and capital gains were added to his $400,000 presidential salary.
In a typical family-values PR push, the Bush tax cut, McIntyre pointed out, "is very tilted toward couples and families with children." Even then, though, it''s only tilted toward certain families: predictably, the rich ones. Bush''s magic number--$1,600--comes from his doubling of the child tax credit from $500 to $1,000 and eliminating the so-called marriage penalty. A couple with two children would thus ostensibly get $500 per kid and a bonus of $600 for not producing illegitimate spawn. But the per-child benefits only kick in once you''re making enough money to pay income taxes. The main beneficiaries will be parents earning between $110,000 and $200,000, who are currently not able to take a child credit. "We''re going to give everyone with a child $500, but we''re going to exclude the people who really need it," McIntyre said. "We''ll give $1,000 to a family with two kids if they''re making $180,000, but we won''t give it to a family making under $30,000. It''s an odd set of priorities."
The same priorities apply to the marriage penalty. Middle- and upper-class families will indeed save. The marriage penalty will henceforth apply only to those earning little enough while single that they qualify for the Earned Income Tax Credit, which, under Clinton, came to almost entirely replace welfare assistance. "If two low-income individuals who are single, one having children, both making $15,000 to $20,000 a year, were to marry," explained David Kaun, economics professor at UC Santa Cruz, "they would lose that." The message is, "If you''re making over $150,000 a year and you marry, we''re going to help you out. If you''re making under $20,000, you''re going to be worse off."
Bush''s case for the tax cuts stems from the surplus. There may be an extra $2.7 trillion in the government''s coffers over the next few decades, he figures--why not give some of it back? Of course, almost everyone admits that the surplus projection is speculative, and even the Congressional Budget Office, which calculated it to begin with, concedes that it''s also possible we''ll have a half-trillion-dollar deficit instead. But if that surplus--the product of years of good fortune on Wall Street and Clinton-era cuts in social spending--does come to pass, and the Bush tax cut slides through Congress, the legacy of the last decade will be an unprecedented bipartisan effort toward that great socialist bugaboo, the redistribution of wealth, but upward, ever upward, from under the mattresses of the worst off into the vaults of the rich.