Fancying that he has a mandate, President George Bush is pushing for a tax cut that could jeopardize America’s economic stability for years to come. I suppose I can understand the urgency Bush feels to pay back the millionaires who bought his campaign, but it wouldn’t take much thought to propose a tax plan that at least looked more fair to all Americans, nonwealthy included. Instead, Bush is leering toward a tax cut with 43 percent of the cut going to the wealthiest 1 percent of our population, according to the nonprofit Citizens for Tax Justice.
Bush proposes a $1.6 trillion tax cut over the next 10 years. He thinks this is safe because, according to his favorite budget forecasts, we’ll have a $5.7 trillion surplus over the next 10 years. History warns us to notice that Bush faced a similar decision as governor of Texas two years ago. Basing his Texas budget on overly optimistic forecasts, he signed a $1.8 billion tax cut. The forecast turned out to be wrong, and now Texas has a budget shortage to go with its terrible smog and dismal healthcare. The predictions Bush relies on now are far too shaky to form a secure foundation for our nation’s budget. First, because of administrative costs, the true cost of his tax cut may be higher. The Washington Post reports that some analysts put the price of Bush’s tax cut at $2.5 trillion. Second, we have no guarantee the surplus will actually exist in 10 years.
Bush’s tax cut itself would reduce the marriage penalty, double the child credit, lower income-tax rates and repeal the estate tax. The costliest pieces of Bush’s tax cut would be the income-tax rate reduction and the estate-tax repeal. Eliminating the estate tax is blatantly pro-aristocracy, so Bush disguises this by preening his bias, saying, “the people with the lowest incomes will get the highest percentage of reductions.” It is true that low-income Americans will receive higher percentage reductions, but when you add the estate tax, the wealthiest Americans will receive a higher percentage of the total tax cut. In his shadiness, Bush never mentions that fact. Bush will also give the rich a disproportionately large volume of the tax cut. He admits that the wealthiest 1 percent will get 22 percent of the cut – a number that ignores the estate tax.
Because the estate-tax repeal is a major part of Bush’s tax cut, we should notice who benefits most and which segment of our country Bush favors. Every single employed American pays an income tax. But only 2 percent of us will ever pay the estate tax: nonmarried Americans who earn more than $675,000 per year and couples who make more than $1.3 million. Plus, current law will eventually change the nonmarried minimum to $1 million, meaning that soon only millionaires will pay the estate tax. Therefore, 98 percent of Americans will never pay the estate tax because they are, by law, completely exempt from it. This is the fairness problem Democrats are concerned with: only the wealthiest 2 percent of Americans pay an estate tax, yet eliminating this tax on idle wealth is central to Bush’s tax plan.
Large estates, or inheritances, should be taxed. They furnish money that exists because of America’s stability, and a proper share should go to preserving the health of the society that allowed that money to exist in the first place.
Even one of America’s most powerful businessmen, Andrew Carnegie, was an estate-tax supporter. Carnegie knew as well as anyone that the estate tax was needed to tax those who hid their money in tax shelters. Speaking about this, Carnegie once wrote, “The man who dies thus rich dies disgraced.” The estate tax is constructive and fair, and it is shaped by American values.
Democrats support the estate tax in principle and in practice. One unfortunate exception, however, is our own congresswoman. Our congressional representative, Lois Capps, voted to eliminate the estate tax, even though she is a Democrat. Thankfully we had a Democratic president to veto the estate-tax repeal. I strongly encourage concerned Nexus readers to contact Capps and share their views of Bush’s tax cut, which will affect us all.
Congresswoman Lois Capps
1428 Chapala Street
Santa Barbara, 93101
Phone: (805) 730-1710
Fax: (805) 730-9153
John Bennett is a senior English major and history major and member of the Campus Democrats.