Friday, May 23, 2003
The Center on Budget and Policy Priorities has a couple of excellent reports available now. First, they address the boondoggle tax cut bill, which for solely political reasons includes "sunset" provisions in the cuts from 2004 to 2008 to make it appear the cuts will cost less than they actually will (GOP'ers have made it clear they will extend the cuts when the sunsets come, and likely claim anyone opposed is in favor of tax increases, too. They are definitely one-trick ponies).
Not surprisingly, the bill also is heavily (out-of-proportion to taxes paid) tilted towards the wealthy:
Analysis of the conference agreement by the Urban Institute-Brookings Institution Tax Policy Center finds that the agreement will provide an average tax cut in 2003 of $93,500 to tax filers who make more than $1 million per year. This exceeds the $89,500 average tax cut that these individuals would have received under the Administration’s tax-cut package.
The Tax Policy Center analysis also shows that 36 percent of all U.S. households will receive no tax cut whatsoever in 2003 under the conference agreement, and 53 percent of households will receive a tax cut of $100 or less.
The average tax cut in 2003 for households in the middle of the income spectrum (i.e., the middle fifth of households) will be $217.
In addition, the bill’s capital gains and dividend provisions are likely to lead to increased use of tax shelters by wealthy taxpayers and corporations. Moreover, in a move that will exacerbate this problem, the conference agreement drops all Senate provisions designed to curb corporate tax shelter abuses.
Because the bill is so skewed to high-income filers, it is likely to be of limited effectiveness in boosting the economy in the near term. High-income households are likely to spend (rather than save) a smaller share of their tax cuts than households of more modest means. Only if tax cuts are spent will they boost the economy in the near term.
Basically, the Congress took Bush's tax cuts, dishonestly decreased their cost by putting in bogus sunset provisions, and actually made them more costly and tilted towards the wealthy by throwing in an additional tax cut for businesses (bonus depreciation and expensing).
At first, a provision to give $20 billion in aid to the states appeared to be a good thing (if a drop in the bucket); on closer look, it would appear that the extra bonus depreciation and expensing tax cut will cause a net loss in revenue for the states over the next decade.
It remains to be seen exactly how much this bill will end up slashing revenues for needed and successful government programs such as the departments of Education, State, Transportation, etc. (which, we don't doubt, rabid anti-government GOP'ers will be more than happy to try and eliminate). Rest assured the costs will be huge, though. The inmates are running the asylum, folks.
And one last point: this bill and any resulting deficits and elimination of programs people depend upon are wholly a GOP disaster. The vote in the Senate was 51-50 in favor of the bill, with Dick Cheney breaking the tie with what amounts to one of the most profitable votes he's ever cast.
Aren't we tired off these rich brats abusing our government and trust to rob us of our money and services?
(Note: the excellent Citizens for Tax Justice also has an analysis on the tax cut fiasco.)
On another note, the CBPP reports that the GOP's unemployment extension bill will do nothing for those whose benefits have already run out (about 1.1 million workers).