Tax cut fraud
In one pocket and out the other
By G.
Dunkel
Nobody likes paying taxes. Particularly in the United
States, where so much of the public budget is dispensed for the
military, for repression--otherwise known as the police and the
justice system--and for corporate welfare, and so little is
spent on social services and public projects like roads and
subways, taxes are despised.
George W. Bush tried to take advantage of this feeling by
running on a platform of a $1.6 trillion tax cut, even though
it was really a promise to his rich backers that he would make
them wealthier, come hell or high water. It was the first major
proposal Bush made to Congress.
The House of Representatives passed it intact at the end of
March, but it faced more partisan opposition in the Senate,
which is split 50-50 between the two major capitalist parties.
On April 7 the Senate passed a commitment to a $1.2 trillion
tax cut. Both Democrats and Republicans claimed victory.
The week before April 7 over 250 articles were published in
major bourgeois papers in the United States covering every
maneuver, every nuance of what was called Bush's tax cut bill.
Yet very few of these articles pointed out that the bill was
not really substantive and did not contain detailed income and
spending projections. It was just a congressional wish list
that will have to go before a joint House-Senate reconciliation
committee, then be voted on again, and finally be signed by the
president before it becomes an official wish list.
While the Senate's tax cut is 25 percent smaller than Bush's
proposal, it did go along with his scheme to apply the cut to
all taxpayers, across the board. This sounds fair, but in fact
favors the very rich.
The administration's own figures claim that families with an
income less than $30,000--and the Census Bureau says that over
a third of U.S. households fall into that category--will
receive an average income tax cut of $264; families with an
income between $30,000 and $40,000 will get $616.
However, someone making $300,000 a year, according to the
accounting firm of Deloite & Touche, would get a break of
$12,000. Someone with an income of $1 million would net
$46,758. Those standing to inherit a large estate worth more
than $1 million will benefit even more from Bush's
proposal.
What the media have failed to point out is that the cuts in
social services that continue to come down cost the workers
much more than a couple of hundred dollars a year. The U.S. is
near the bottom of the list of industrialized countries in
providing adequate public services, which are mainly used by
the working class, not by the rich. Because of the tax cut,
there will be even more pressure to eliminate all kinds of
needed government services.
Social Security tax
There is another tax that has a big impact on U.S. workers,
but it wasn't mentioned. It takes a big bite out of workers'
paychecks but hardly nicks the rich. It is the Social Security
tax.
The Social Security tax, called FICA on our pay stubs, goes
to pay the old-age benefits of current recipients. Currently,
the payroll tax is 12.4 percent for Social Security and 2.9
percent for Medicare, for a total of 15.3 percent, divided
equally between employee and employer. A self-employed person
pays nearly the whole amount.
The Social Security tax is currently capped at $82,000 a
year--income above that point is not taxed. Bill Gates pays the
same Social Security tax as some hard-working skilled person
with two jobs.
At least half of U.S. workers pay more in Social Security
taxes than they do in income taxes. (Washington Post, June 27,
2000) If the employer's contribution is counted as really
coming out of the value created by the worker, then 80 percent
of U.S. workers pay more Social Security tax than they do
income tax.
Bush's tax cut won't have any impact on this major burden
for U.S. workers--one that they shoulder willingly because they
feel it supports the infirm and elderly. There are many ways
this burden could be lightened--such as raising or eliminating
the cap, and excluding the first $20,000 of income. That would
bring real tax relief to those who need it the most.
The only thing most working Americans will get from Bush's
generous gift to the rich is a hill of beans.
This article is copyright under a Creative
Commons License.
Workers World, 55 W. 17 St., NY, NY 10011
Email: ww@workers.org
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