Commentary-These Tax Cuts Ain't For You, Honey
Commentaryâ
These Tax Cuts Ainât For You, Honey
By Holly Sklar
It would take 17 Donald Trumps to match the $43 billion net worth of investor guru Warren Buffett, the worldâs second-richest man. When it comes to federal taxes, though, Buffett pays about the same rate as his office receptionist.
âI pay a somewhat higher [federal tax] rate for my combination of salary, investment, and capital gain income than our receptionist does,â Buffett wrote last year, âBut she pays a far higher portion of her income in payroll taxes than I do.â
If President George W. Bushâs tax cuts for the wealthy keep moving forward, the receptionist will pay a higher overall tax rate than her boss. She already pays a higher rate in state and local taxes. In Nebraska, home of Buffettâs firm, Berkshire Hathaway, the richest one percent of families effectively paid 6.4 percent of their income in state and local taxes in 2002, the middle 20 percent of families paid 9.8 percent, and the bottom 20 percent paid 10.2 percent, reports the Institute on Taxation and Economic Policy.
In the presidentâs home state of Texas, taxes are even more regressive: The richest one percent paid just 3.2 percent of their income in state and local taxes, the middle fifth paid 8.2 percent and the poorest fifth paid 11.4 percent â more than three times the rate of the rich.
Criticizing tax breaks for large investors and corporations, Buffett recently told Berkshire Hathaway shareholders, âIf class warfare is being waged in America, my class is clearly winning.â
The Bush tax policies are slashing taxes on dividends, capital gains and estates, with most of the benefits going to the richest one percent.
Do you want an America where soldiers and teachers pay a larger share of their incomes in taxes than the laziest heirs of the wealthy living off inherited investments? The president surrounded himself with middle-class families to launch his tax cut campaign in 2001. When a reporter asked why no one was representing the top bracket, Bush laughingly replied, âI beg your pardon. Iâm representing...the top tax bracket.â
George and Laura Bush reported income of $822,126 on their 2003 tax return, putting them in the top one percent. Dick and Lynne Cheney topped the Bushes with $1,900,339, including $627,005 in tax-exempt interest on municipal bonds and $178,437 in deferred compensation from Halliburton. Administration tax policies have been good for them, but not for the country.
While Warren Buffett has a golden track record, Mr Bush has a reverse Midas touch, transforming surplus into debt. Under Buffett, Berkshire Hathawayâs per-share book value grew from $19 in 1965 to $50,498 in 2003, a rate of more than 22 percent compounded annually â about twice the rate of the S&P 500 stock index. Under Bush, the federal budget reversed course from a projected 2002 to 2011 surplus of $5 trillion to a projected deficit of more than $4 trillion, the Center on Budget and Policy Priorities reports.
Federal tax revenues have fallen to their lowest level as a share of the economy since 1950. We canât have a 21st Century country with 1950 tax revenues. The average 2004 tax cut for the richest one percent â $59,292 â is more than the typical firefighter, registered nurse, environmental scientist, social worker, or police officer makes in a year. The average top one percent tax cut can pay for a gold watch and a Hummer H2, at a time US soldiers are dying in their own Humvees in Iraq.
If extended, already-enacted tax cuts for the richest one percent will cost the treasury more than $1 trillion between 2001 and 2010. Those lost revenues wonât go to schools, homeland security, health care, research, small business development, or renovating the aging infrastructure built with the tax dollars of prior generations. Bush wants even more tax cuts.
Next time you drink safe water from your faucet, send your kids to school, cross a bridge, use a park or library, or call 911, remember this â if we want public services and infrastructure, we have to pay for them. The rich already pay a smaller share of income than everyone else in state and local taxes. Do you want that at the federal level, too?
If you want taxation with representation, nowâs the time to make yourself heard.
(Holly Sklar is coauthor of Raise the Floor: Wages and Policies That Work for All Of Us.)