TAX CUT
No benefits in sight for workers
By John
Catalinotto
Passage of a Republican-sponsored "tax-cut" bill in the
House of Representatives has sparked partisan debate between
Democrats and Republicans over what sections of the ruling
class will get the greatest benefits from expected federal tax
revenue surpluses.
Politicians in the two major capitalist parties are carrying
on this debate with an eye toward the 2000 presidential and
congressional elections. Each side presents its program as if
it helps everyone. But both plan a compromise that continues to
benefit the wealthy.
The Democratic Party's characterization of the Republican
tax cut as a "giveaway to the rich" is basically accurate. But
both parties participate in the rip-off of workers' wages for
the benefit of the banks, the military-industrial complex and
the ruling class in general.
Workers need an independent analysis of the budget surplus
to evaluate both parties' proposals and produce a working-class
alternative.
All wealth is created by labor, by those who sell their
labor power by the hour. Under the capitalist system, a big
portion of that wealth is appropriated--stolen--by the
capitalists, those who own the means of production or the
banks.
The federal government's role is to preserve this system
that keeps a small portion of the population exploiting the
vast majority in the working class, and to expand it worldwide.
The government does this with the Pentagon, the police and many
agencies to regulate and promote commerce.
Yet a lot of this federal revenue is collected directly from
the working class. Since the Democratic Roosevelt
administration introduced the withholding tax in 1943, this
automatic tax collection has forced almost every worker to pay
into the system.
Before that, only a few million of the wealthiest people
paid income taxes.
Who made the surplus?
Working people pay even more in federal payroll taxes
designated for Social Security and Medicare. This tax is
regressive, because people with lower incomes--less than
$68,400 per year--pay a higher proportion of their wages than
those with higher incomes. This amount, 7.65 percent of income,
is matched by a payroll tax on the employer. Self-employed
workers pay the entire 15.3 percent.
All of the current year's surplus comes from Social Security
and Medicare taxes, which have been included in the total
federal budget since 1967. According to New York Rep. Charles
Rangel, eight out of 10 taxpayers--those with the lower
incomes--pay more in these payroll taxes than they do in income
taxes. (Washington Post, July 20)
Government analysts claim that continued economic expansion
will produce a surplus of $1 trillion in the federal budget
over the next 10 years. More workers with jobs paying more
income and payroll taxes are responsible for a lot of this
surplus. Also, the tremendous cuts in social programs under
Reagan, Bush and Clinton have cut government expenses.
Another source of the surplus involves the enormous growth
of inequality of incomes in the United States. Those with the
highest incomes have had the greatest growth. On average people
in the lower 80 percent of income have stayed about even.
Although the top income rate is taxed at only 38 percent--this
top bracket was 91 percent in 1960--those who got these
increases in salary also paid higher amounts of federal income
taxes. Of course they still had vastly greater take-home pay
than ordinary workers.
Republican `tax-cut' rip-off
The Republican program is a more obvious rip-off of the
workers. It promises an across-the-board reduction in taxes.
But what's the result?
Brookings Institution senior fellow Allan Gale, quoted in
the July 20 Washington Post, illustrated that a supervisor who
gets $200,000 in salary--only 1.8 percent make at least
this--would get a $9,200 tax break under the Republican
bill.
Someone in the bottom 50 percent of wage earners would get
$1 per week.
Progressive tax reformers argue for using the surplus to
restore social programs, with no tax cuts for high-income
people. If there are any tax cuts at all, it should be for
workers' payroll taxes. Of course this is still operating
within the framework of U.S. capitalism.
Clinton's response--as it has been since his first days in
office--is to propose a program that barely looks more
progressive than the Republicans'.
Clinton still plans to expand spending for the Pentagon and
police. He plans to pay off part of the $3.7 trillion national
debt, most of which is due to past military spending. He plans
to use only part of the Social Security surplus for Social
Security and Medicare.
Even with a progressive and popular social program like
Medicare, government funding helps increase profits for
insurance companies and pharmaceutical manufacturers.
And Clinton may still compromise with the open Republican
giveaway.
This article is copyright under a Creative Commons License.
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