The Angry Cyclist

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Wednesday, July 14, 2004
 
The Royal Scam

The Boston Globe's resident communist lays it on rather thick today, prompting me to get off my lazy, non-blogging ass and beat this worthless piece of rhetorical bullshit into the ground.

New tax cut scam excludes poor kids


Tax cut = scam. No bias here...

By Robert Kuttner | July 14, 2004

CONGRESSIONAL Republicans are hoping to pass yet another budget-busting tax cut this summer and manipulate Democrats into voting for it by using poor children as the bait.


Busting the budget... as the U.S. Treasury posts a $19 billion surplus for the month of June.

In 2001 and 2003, Congress passed legislation providing a child tax credit for the middle class that gradually rose to $1,000 per child, but Republicans excluded working-class children who needed help the most. In the 2003 law, families earning between $10,500 and $26,625 got no additional handouts from the federal government nothing, including 260,000 children of active-duty servicemen and women. All told, about one child in four was excluded.


Which is another way of saying three out of four were not excluded. And Kuttner is as clear as mud explaining precisely how the families 'children' of the one in four 'got nothing'; the best I can deduce is that their incomes increased, supposedly reducing the available tax credit. Even allowing for that I think he's blowing smoke up everyone's ass with that assertion because there's no explicit mention of a phaseout of the credit at those income levels.

Working-class families were left out because their breadwinners are too poor to pay much federal income tax. Republicans argued that anyone who paid little or no income taxes had not earned tax relief. Of course, these families do pay sales taxes, payroll taxes, excise taxes, and property taxes.


Heh. How many people in that income bracket do you think actually hold a mortgage? Leave it to Kuttner to roll out the 'let's change the subject' tactic of discussing federal income tax and instead talk about all taxes. All he accomplishes there is admitting to an extent that one segment of society is overtaxed. That's not the ground a socialist should be treading on.

Republicans are now proposing to extend token benefits to lower-income families, but their price is a dramatic expansion of the tax breaks for well-to-do families with incomes of up to $309,000 -- that's the richest 2 percent of American families (You mean like this rich person? - Ed.). The preexisting law wisely phased out all child tax credit benefits at family incomes of $149,000. The new Republican proposal would more than double that income ceiling at a cost to the deficit of $89 billion over 10 years.


Which is another way of stating 8.9 billion over one year, which is less than half of the current month's budget surplus. The 'cost' to the deficit looks a lot smaller when rephrased in those terms, doesn't it?

Under the Republican bill, which has already passed the House, the affluent families would get tax cuts of $1,000 per child. The poor ones would get $150 per child. Anyone with less than $10,500 would get nothing. That's almost exactly the annual income of one fulltime minimum wage earner.


The 'rich' taxpayers get tax relief because they actually pay federal income tax. Taxpayers with AGI of $10,500 don't get tax relief because they don't pay federal income tax. Why doesn't Kuttner want to frame the debate that way?

As fiscal policy, this is logical appalling, since the previous tax cuts tilted to the wealthiest already create decades of unsustainable deficits. As social policy, it is even worse -- perfect Robin Hood in reverse.


Bob, the Treasury is currently running surpluses. And why is it preferable 'social policy' to reinvent Robin Hood redistribution the welfare state via tax policy? Thanks for the well thought out explanation.

But Congress may well enact this legislation, deftly timed for a Rose Garden signing ceremony festooned with happy children and right on the eve of the Democratic National Convention. In a charming touch, Republicans have dubbed the week of July 19 "Tax Fairness Week."


Timely. Just a few weeks after most Americans celebrated Tax Freedom Day. It seems to me working half of the time to support various levels of government and the people who benefit from it will lead most people to dismiss the Big Government cheerleading from unrestrained communists like Kuttner for the shit it is.

Here are the legislative politics: The extension of the tax breaks to more affluent families, plus a few crumbs for poor ones, is wrapped into a bill that makes the middle-class child tax credit and other tax cuts permanent and also gets rid of the so called marriage penalty. Total 10-year cost: about $500 billion.


Look at the old tax tables, Robert, and try to explain to me why married people at a given AGI number fall into the next tax brackets well before the halfway point of that AGI number as an unmarried person. It's because those married tax tables assume the spouse only made 60% of the other. That's the 'so called marriage penalty'.

The child tax credit was one of the few provisions in the Bush tax program that actually delivered some benefits to the broad middle class.


That admission's gotta be killing him...

Few legislators will have the nerve to vote against a package that includes it. Indeed, in political circles of both parties, where politicians spend an inordinate amount of time with large donors, $309,000 is a fairly typical income for those who can afford to write a $1,000 donation check. It seems almost middle-class. This is one reason why the Democratic Party has lost its edge.


That's right - the Democratic Party, the Party of the common man.

For now, the only thing holding back this travesty of a tax bill is a small group of liberal moderate Republican senators led by Olympia Snowe of Maine. This brave heroic, noble band of lawmakers actually believe that no further tax cuts should be enacted unless they are explicitly paid for either with other tax increases or program cuts. For the moment, the Republican chair of the Senate Finance Committee, Charles Grassley of Iowa, is deferring to Snowe.


Hey, Bob - how about advocating some program cuts, in the name of bipartisanship & all that?

That demand makes fiscal sense, but it would be a shame if this tax giveaway were resisted solely on the ground that it busts the budget. The more serious outrage here is that poor children who desperately need better schools, better health care, and better early-childhood programs are getting less from the government than ever, while affluent families who've already gotten extensive tax breaks are getting more.


At what point do you hold the parents of the 'poor children' accountable for failure to provide adequate resources for the children, Bob?

Republican legislators could well come up with some budgetary gimmick that makes it seem as if this new round of tax breaks is paid for, and then the moderates with the green eyeshades will likely cave in and allow the bill to become law.


And if the Democrats were in power, there would be no 'gimmick' but a 'fair solution' instead.

If that occurs, let's hope that Senators Kerry and Edwards have the nerve to vote against it and use the occasion to explain to voters how the administration is cheating the many to reward the few. Yes, this would invite a new round of Bush TV ads denouncing Kerry for voting "against children" and for "higher taxes." But if Kerry has the gumption, it could also smoke out a real debate that Bush can't win if voters are encouraged to pay attention.


You're asking Kerry to take a strong stance on an issue? Talk about wishing upon a star!

Robert Kuttner's is co-editor of The American Prospect. His column appears regularly in the Globe.