by Randolph T. Holhut
American Reporter Correspondent
June 16, 2001
DUMMERSTON, Vt. -- So, what are you going to do with your rebate? The $600 that my wife and I are likely to get from President Bush's tax cuts are enough to pay for the five cords of firewood we burn each year to heat the house. It might cover the next brake job I need on my 1997 Geo Metro, maybe with enough over for a set of tires. Or it could pay for replacing the rotting parts of our back deck.
These are examples of the economic stimulus that the Bushies hope will come as a result of this one-time rebate. There's a catch, of course.
According to Citizens for Tax Justice, 35 million folks in the lowest income group are not going to get a rebate. In other words, the people who could really use some extra cash aren't getting a dime.
This shouldn't come as a surprise, given how stacked this bill is toward the wealthiest Americans, and how stacked federal tax policy has been for the past two decades in favor of the fat cats.
The Congressional Budget Office recently released a study that showed the richest one-fifth of American households saw their after-tax income increase more than 50 percent from 1979 to 1997, while the bottom one-fifth saw no increase in their income at all. The richest 1 percent during that period saw their average income rise from $263,000 to $677,900 - a 157 percent increase.
As the fat cats get fatter, their share of taxes has gotten smaller. According to the Internal Revenue Service, the average annualincome of the top 400 richest individual taxpayers rose from $50 million in1995 to $110 million in 1998 - an increase of 117 percent.
But those top 400 saw their average tax rate decline from 30 percent to 22 percent duringthat period. At least $12 million of that increased personal income, or 20 percent of it, came from tax relief.
Expect their tax load to go down further with the reduction of the top tax rate from 39.6 percent to 35 percent by 2006. David Cay Johnson of The New York Times, who won a Pulitzer Prize this year for his reporting onfederal tax policy, has said those top 400 taxpayers will see an average tax cut of $1 million a year. And that's the Bush plan in a nutshell. The average fellow gets afew hundred bucks to fix his old car. The fat cat gets millions to buy anew Bentley, pay off that charming little vacation home in Aspen, and buy that hot stock that will make him several million more.
President Bush has sold his tax plan as everything from a way to prevent a recession to a way to pay for higher energy costs. He never did say that his plan - which will actually cost nearly $2 trillion, rather than the stated $1.35 trillion over the next 10 years, according to the Center on Budget and Policy Priorities - is a plan to raid the federal treasury on behalf of the wealthiest Americans.
That in itself is outrageous. But the most outrageous part is scarcely being talked about, and that's how this blatant giveaway to the rich will cut social spending, return the federal government to running up huge deficits and, most of all, drain away the money that's supposed to pay for the retirements and health care of the Baby Boomers.
The Bush tax bill is set to expire in 2011, the year the first wave of Boomers become eligible for Social Security and Medicare. The federal treasury has already kissed $2 billion goodbye with this bill, and big business is already lining up to get its share of the boodle from Bush. Over the next decade, the money that's supposed to be set aside to keep Social Security and Medicare solvent will be stuffed into the pockets of the wealthy and the corporations.
When the Boomers start retiring and the extent of the looting finally becomes evident to all, do you think anyone in Congress is going to vote to raise taxes? Or will this finally provide the excuse to privatize Social Security and Medicare?
So, Mr. and Mrs. Middle America, enjoy the $600 check your going to be getting later this summer. The Bushies think they're going to make you so happy by sending a tiny rebate check to you that you won't notice how much money goes to the rich or how America's future is mortgaged to pay for it.
Randolph T. Holhut has been a journalist in New England for more than 20 years. He edited "The George Seldes Reader" (Barricade Books).