Thursday, December 23, 2004

Bush's Tax Plans

Now here's a topic that is probably as unpleasant as anything I could write, except perhaps something on root canals without anesthesia. Yet taxes are something that we will not get rid of; "we" meaning people in the lower and middle income classes. The rich, according to our all-knowing leader, are too wily to be caught paying taxes. Though previous leaders somehow managed to make them pay. Never mind.

President Bush is planning to make our tax system "simpler, fairer and more pro-growth", and this very term is used in the linked article as if these adjectives are generally accepted neutral descriptors of his plans. Nothing could be further from truth. I wrote to AP to complain about such biased reporting, but even that gesture is probably pointless.

What Bush may be planning (though no-one knows for sure) is the abolition of the Alternative Minimum Tax (AMT) and the introduction of extra tax-relief for the wealthy:

While retaining the current income tax system, this option would eliminate the Alternative Minimum Tax, which was designed to make sure the rich paid their fair share of taxes but is now ensnaring more middle-income taxpayers. The proposal also would significantly expand opportunities for people to set up savings accounts where their investment earnings would be tax-free, something the administration has been pushing for two years.
Eliminating the AMT, which covered 3 million mostly wealthy taxpayers in 2004 but will raise the taxes of 23 million taxpayers by 2008, would cost the government an estimated $600 billion over 10 years.

What this means is that the new tax code would allow the wealthy to pay less and less. So what else is new? Well, the fact that Bush wants a revenue-neutral tax change. In other words, if we cut the taxes of the rich, we need to raise something else to take care of the lost 600 billion dollars. And what might this "something else" be? Guess:

To pay for that and the more generous savings accounts, the "least radical" proposal would eliminate the itemized deduction for state and local income taxes, while imposing a tax on Social Security benefits and employer-provided health care benefits.

How is this not raising taxes? Of course it would raise taxes, and it would raise them not only on the rich but also on the middle class. And it would especially increase the payments in the so-called Blue states (which voted for Kerry), because the itemized deduction for state and local income taxes is more important in those states. The net effect would be that the middle classes would pay more and the rich would pay less (because they get all the benefits yet carry only some of the increased taxes).

And not only that, the taxing of employer-provided health benefits has the same effect as an increase in the cost of health insurance on the accessibility of health care. At a time when access to health care is a major concern of most voters, the administration is planning to make this even harder! And why? So that the wealthy may have more money.

I wouldn't call that exactly moral, but then I'm in the wrong party for defining morals.