April 06, 2004
I Heart Taxes
Posted by nerdling | April 6, 2004 11:02 AM
Until now, the public debate over the Bush tax cuts has played out along predictable, partisan lines. You've heard it so often, you can probably say it along with me. Bush argues that cutting taxes for all Americans stimulates the economy and will make everyone more prosperous. His stated goal: "Lower income taxes for all, with the greatest help for those most in need.'' Meanwhile his opponents say the bulk of the tax cuts have gone to the well-off. Bush and his opponents are both being factual—but, as we'll soon see, they use convenient facts and ignore inconvenient ones.
The blather from both sides obscures the real, but largely hidden, agenda behind the Bush tax cuts. Bush has been open about each item he wants: lowering taxes on capital income, such as dividends and capital gains; creating two big new income-sheltering investment plans; eliminating the estate tax. But he's not been at all forthcoming about the ultimate effect of his program. If Bush gets what he wants, the income tax will become a misnomer—it will really be a salary tax. Almost all income taxes would come from paychecks—80 percent of income for most families, less than half for the top 1 percent. Meanwhile taxpayers receiving dividends, interest and capital gains, known collectively as investment income, would have a much lighter burden than salary earners—or maybe none at all. And here's the topper. In the name of preserving family farms and keeping small businesses in the family, Bush would eliminate the estate tax and create a new class of landed aristocrats who could inherit billions tax-free, invest the money, watch it compound tax-free and hand it down tax-free to their heirs.
I've always been suspicious of investments as a form of income. Perhaps I'm old-fashioned but getting something for nothing doesn't seem kosher, so I avoid it. Apparently I've missed an amazing racket, though I still get to sleep soundly at night knowing I'm not doing anything shifty. And I get to wake up early to go to work and earn my heavily-taxed salary.
Oh capitalism, how I love you.
