Robin Hood in reverse
A Times EditorialThe U.S. House's tax cut package takes from the poor and gives to the rich while putting the nation even deeper in debt.
Published December 12, 2005
Forget the Republican rhetoric that tax cuts for the wealthiest Americans benefit the less fortunate. We've heard that story before, and it was written by Charles Dickens. Here are the relevant details about the U.S. House's tax cut package: It would take from the poor and give to the rich while sinking the nation deeper into debt.
House Republicans and a handful of Democrats passed a budget bill that includes $56-billion in tax cuts, with more than one dollar in three going to those with income from capital gains and dividends. Added to previous tax cuts, the total balloons to $95-billion. Subtract the House's spending cuts of $51-billion, and that leaves a $44-billion IOU that will make future Christmases less merry.
And this comes from people who call themselves fiscal conservatives. Listen to the rationalization for more tax cuts from Rep. Jeb Hensarling, R-Texas: "Clearly, tax relief is part of the deficit solution, not part of the problem." If that is so, then why didn't the House just abolish taxes, solving all of our problems?
So if the tax cuts don't make sense fiscally, how about on a humanitarian basis? Here, they fail even more miserably. The burden of spending cuts weighs heaviest on Medicaid recipients, students needing loans for college, single mothers relying on child support and those needing food stamps. Forget asking for another bowl of porridge.
Meanwhile, 40 percent of the benefit from extending lower tax rates on capital gains and dividends goes to those earning $1-million or more a year, for an average windfall of $50,000. Families that earn $50,000 a year the hard way can look forward to no net gain after small raises are wiped out by higher health insurance, energy and interest costs.
When it came to the most important tax issue - getting the alternative minimum tax under control - the House pulled a fast one. It passed a one-year patch for the AMT but didn't include it in its budget bill, which is important under Congress' arcane rules. Originally, the AMT was supposed to force a few wealthy cheats to pay their fair share of taxes, but because it wasn't indexed for inflation it now penalizes middle-class families.
The Senate included an AMT fix in its $60-billion tax-cut package but rightly ignored capital gains and dividends. Now the House hopes to trick the Senate into removing the AMT tax cuts from its budget bill (which can't be filibustered) and inserting the capital-gains and dividend tax cuts instead. If that happens it would be a sumptuous feast for the wealthy, leftovers for those in the middle and nothing for the poor.
Is this what America has come to? Only a principled stand by the Senate will save us from an unwise and unjust outcome.