Bush Panel Recommends More Taxes on Earned Income

The Bush administration continues to try to find ways to reduce taxes on investment income at the expense of earned income and the working class. On Tuesday — and I have no idea why this isn’t getting more ink in the press — Bush’s tax advisory commission recommended several sweeping changes to the tax code which they claimed would equalize the tax burden among all members of society. They play a nice game, don’t they? “We just all want to be equal — everyone pays an equal share in taxes.” They talk about simplifying the tax code, and being “fair.” So how do they hope to accomplish this fairness? Well, the biggest change would be to limit tax breaks for homeowners. The panel recommended lowering the maximum amount of mortgage interest deductable from $1 million to the maximum the FHA will insure (from about $250,000 to $311,000). That might help some people, but here in NY where housing is particularly expensive, it is bound to hurt the working class who are already suffering under this administration’s tax policies. Add to that the second recommendation to eliminate deductions of state and local income taxes, and you have a situation that will hit a lot of working families very hard. The panel also recommended removing deductions on interest for home equity loans and mortgages for second homes.

I just think it’s odd that this administration has been virtually good for absolutely nothing, and they now want to go after the one area of the economy that kept everything afloat for several years now — the housing market. This administration promised us — PROMISED US — that if we enacted its tax cuts early in Bush’s first term, that we’d see millions of new jobs. It still hasn’t happened. This administration hasn’t been able to keep us safe, it hasn’t been able to act promptly in response to the needs of its citizens during natural disasters, it hasn’t helped us gain a decent prescription drug program for our seniors, it hasn’t protected our interests by formulating a proper national energy policy. It seems in every case where this administration has had a decision to make, it has made the wrong decision. And now, in its zeal for the implementation of a national flat tax, it plans to get its fingers in another area that should be left alone. But I digress…

Another part of this brilliant plan calls for employer-paid health care premiums over $11,500 for a family policy to be treated as INCOME and to be therefore TAXED as income! Also, of course, there would be a further reduction in the number of tax brackets, and a large percentage of wealthy Americans would see their tax rate further reduced from 35 percent to 33 percent. If those Americans are also receiving dividends from company investments, they would no longer be taxed on that income. Also, the top capital gains tax rate would also be reduced, so if guys like Bill Frist decide to sell off their stock in their own companies, they won’t have to pay as much tax on the sale.

Also, the maximum tax rate paid by corporations would be further reduced, of course.

What the hell is wrong with these people? And why aren’t people paying attention?

Some will answer back that the restructuring of the tax system for corporations would more equally tax different types of companies. My response to that is I know nothing about corporate taxes, but if this “improved fairness” to different levels of corporations is similar to the “improved fairness” to families as stated above, there is no intent here to be fair at all. Once again, it’s a smokescreen to benefit those who are friends of the White House and major contributors to the GOP.

How long can this go on? How many times does the flat tax have to be discussed before people realize that there is no fairness at all in a flat tax? Why can’t we give the working class a break to help them move up the chain? We all know that it takes money to make money. All the breaks are given to you once you have money — once you own a house, once you have established a credit history. This requires people to be given a fair chance to obtain these things.

It’s not until you making a decent income that you start getting those 0% interest credit card offers. It’s not until you own a home that you start getting major deductions on your income tax. It’s not until you invest money that you can start making money and start planning for retirement and get help from a financial advisor. It’s not until you do all these things that people start crawling out of the woodwork with help and services to benefit you. It’s not until you can stop living hand to mouth that you can really use your money in ways that help you and your family. So why does this administration keep trying to put more burdens on the poor and working class? Why can’t we give them a break?

No one who is rich is entirely self-made. It’s an impossibility these days. Somewhere along the line they got a break, an opportunity. Somewhere along the line they benefited from being in America, or from someone who helped them out. No one starts things in a vacuum.

When I earned $12,000 a year starting out, I did not have the ability to contribute much for the services I used from this country and my town — roads, schools, etc. Now that I earn a decent wage, I do not mind paying my share for these things because I am a fortunate American who had the opportunity to do whatever I wanted with my life. It is my duty to pay my taxes. It is not something that I look upon the government and say, “what did you do for me? I need to do nothing for you.” When Dick Cheney told John Edwards during the debate that the government had nothing to do with his becoming rich, the audience may have laughed and cheered, but Cheney was lying. Do we need to bring up Halliburton? The government had NOTHING to do with Halliburton getting where it is today? Or getting where it was at the time of the debates? Sure.

The point is, a graduated tax system proposes that those of us who benefit most from this country have an obligation to give back a greater share. If I make minimum wage, I’m earning let’s say $250 a week. Out of that, local and federal taxes, plus Social Security and Medicare might take 40%. That leaves me with $150 a week. $600 a month. If I make $3500 a week, after 40% being taken out, I’m left with $2100 a week, or $8400 a month. I think we can all agree that $100 out of a $250 paycheck hurts a hell of a lot more than $1400 out of a $3500 paycheck. Increase the higher tax to 50% (which is actually closer to what a lot of what the middle class pays) and you end up with $1750 a week, or $7000 a month.

The Republicans are all crying and moaning about “the Democrats want to redistribute my wealth! They want to take money out of my pocket and give it to the poor!!!” That is pure bullshit. Let me ask you this — to whom did this supposed national “surplus” go? Did it go to the poor? It certainly did not. If you made $14,000 a year, and suddenly you paid ZERO federal income tax due to the new tax rules, is that a huge amount of money the the government is missing? As of May 2005, there are 7.5 million millionaires in the country today. That’s 7.5 million people right there that used to be taxed at almost 40% during Clinton’s tenure. In fact, just about everyone making around $300,000 or more was taxed at that rate. The maximum rate they pay today is 35%. So I ask you, what was far more likely to cause the tremendous deficits we see today? A few hundred dollars to the poorest Americans (millions of them though there may be), or the massive amounts of reduction in taxes for the millions of people in the highest income brackets?

And lest you think that the richest Americans were suffering tremendously under the Clinton tax brackets, the Congressional Budget office reported in 1994 (using the latest Census figures at the time) that the top one percent of families experienced an average gain of 72 percent in ther after-tax income from 1977 to 1994 compared to other groups. Also, the average after-tax income of the top fifth of families as a percentage of total national after-tax income rose 25 percent during the same time period. Yeah, our richest in this country were really hurting, and in need of a tax cut. That highest fifth averaged $80,417 in after tax income, while the top one percent averaged $374,131.

Any way you look at it, this administration continues to try to redistribute wealth to the richest of Americans. It’s nothing new. They’re just looking at new ways to do it. Whether you call it a “flat tax,” or “tax fairness” or whatever, it’s still the same thing — class warfare against the poor and working middle-class. It’s hurting our citizens and it’s hurting our economy, and it’s time we all started paying attention to the finer details instead of just listening to rhetoric.

And here’s a thought — if you really want to talk about equality and fairness, why not look at ways to tax earned income and investment income in a similar manner instead of making working Americans who are just trying to get a leg up shoulder a disproportionate amount of the load?

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