According to The New Republic, Senator Zell
Miller - one of a dwindling band of Democrats
who still think they can make deals with the
Bush administration and its allies - got shafted
in the recent tax bill. He supported the bill
in part because it contained his personal
contribution: a measure requiring chief executives
to take personal responsibility for corporate
tax declarations. But when the bill emerged
from conference, his measure had been stripped
Will "moderates" - the people formerly known
as "conservatives" - ever learn? Today's "conservatives"
- the people formerly known as the "radical
right" - don't think of a deal as a deal;
they think of it as an opportunity to pull
yet another bait and switch.
look at the betrayals involved in this latest
Most media attention has focused on the child
tax credit that wasn't. As in 2001, the administration
softened the profile of a tax cut mainly aimed
at the wealthy by including a credit for families
with children. But at the last minute, a change
in wording deprived 12 million children of
some or all of that tax credit. "There are
a lot of things that are more important than
that," declared Tom DeLay, the House majority
leader. (Maybe he was thinking of the "Hummer
deduction," which stayed in the bill: business
owners may now deduct up to $100,000 for the
cost of a vehicle, as long as it weighs at
least 6,000 pounds.)
Less attention has been paid to fine print
that reveals the supposed rationale for the
dividend tax cut as a smoke screen. The problem,
we were told, is that profits are taxed twice:
once when they are earned, a second time when
they are paid out as dividends. But as any
tax expert will tell you, the corporate tax
law is full of loopholes; many profitable
corporations pay little or no taxes.
The original Bush plan ensured that dividends
from such companies would not get a tax break.
But those safeguards vanished from the final
bill: dividends will get special treatment
regardless of how much tax is paid by the
company that issues them.
little change has two big consequences. First,
as Glenn Hubbard, the former chairman of the
president's Council of Economic Advisers and
the author of the original plan, delicately
puts it, "It's hard to get a lot of progressivity
at the top."
wealthy individuals who get most of their
income from dividends and capital gains will
often end up paying lower tax rates than ordinary
Americans who work for a living.
the tax cut - originally billed as a way to
reduce abuses - may well usher in a golden
age of tax evasion. We can be sure that lawyers
and accountants are already figuring out how
to disguise income that should be taxed at
a 35 percent rate as dividends that are taxed
at only 15 percent. Since there's no need
to show that tax was ever paid on profits,
tax shelters should be easy to construct.
course, the big betrayal was George W. Bush's
decision to push this tax cut in the first
place. There is no longer any doubt that the
man who ran as a moderate in the 2000 election
is actually a radical who wants to undo much
of the Great Society and the New Deal.
Look at it this way: as the Center on Budget
and Policy Priorities points out, this latest
tax cut reduces federal revenue as a share
of G.D.P. to its lowest level since 1959.
That is, federal taxes are now back to what
they were in an era when Medicare and Medicaid
didn't exist, and Social Security was still
a minor expense. How can we maintain these
programs, which have become essential to scores
of millions of Americans, at today's tax rates?
Grover Norquist, the right-wing ideologue
who has become one of the most powerful men
in Washington, once declared: "I don't want
to abolish government. I simply want to reduce
it to the size where I can drag it into the
bathroom and drown it in the bathtub." Mr.
Bush has made a pretty good start on that
brings us back to Senator Miller, and all
those politicians and pundits who still imagine
that there is room for compromise, that they
can find some bipartisan middle ground. Mr.
Norquist was recently quoted in The Denver
Post with the answer to that: "Bipartisanship
is another name for date rape."
on Tuesday, June 6, 2003 by the New
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