If you are still raging about your 2002 taxes, due last April 15th, you are not alone.
Fortunately, our benefactors in the U.S. Congress feel our pain. As a result, they have been debating a federal tax cut proposal that would amount to about $726 billion slashed from the tax bills of Americans. Before we all rush out to celebrate our windfall of tax refunds, consider the reasons given for the cut by its supporters and what they fail to mention about this proposed legislation.
Though $726 billion is totally incomprehensible to my pea-brain, it must mean that we will all receive a huge tax break.
Think again, pea-brain. The Bush administration‘s tax cut plan would reduce my taxes by $50 if I made $35,000 this year. $50, whoopee. That might cover dinner and a movie with my girlfriend. It begs the question: to whom is the other $749,999,999,950 going? Donald Trump and Bill Gates, that‘s who.
Why would anyone of sound mind and average financial means want to support the main component of the plan. No one I know. It is a dividends tax cut that gives back 50% of the savings to the top 2% of the population? The problem is that many of our lawmakers are in the same income bracket as Trump, Gates, et al - filthy rich. They think that by throwing a few bones ($50 or so - each) to the masses, we will happily step aside while the Brinks trucks transport even more bundles of cash to their gated compounds.
It was the budget surpluses from the Clinton years that justified these tax cuts, so just give us back our money.
I get a chuckle out of the “our money“ argument. We barely got used to fiscal surpluses and now they are gone. As Ernie Harwell would say, “Long gone.“ A review by financial experts at Goldman Sachs have concluded that the deficit will increase by $4.2 trillion to $6.7 trillion over ten years if the administration‘s new tax cuts are enacted. These stratospheric figures don‘t even include the cost of the invasion of Iraq and other wars and reconstruction jobs in the quest to eliminate terrorism.
Do we really want our $50 tax refunds enough to allow the federal debt to be increased by trillions for our children and grandchildren to pay off? From now on have a ready answer when someone demands to get his tax money back, exclaiming, “It belongs to me.“ Make sure you remind him, “Don‘t forget to pay back your share of the trillions in federal debt while you are at it. That belongs to you, too, buddy.“
The government needs to stimulate the short-term economy in order to get things moving again, right?
This argument is debatable - by the administration itself. The president continually reassures us by saying the economy is, “Pretty darn strong.“ Many experts think the economy is recovering and consumer confidence is the only thing lacking at present.
Even if we do need a short-term stimulus, less than 9% of the administration‘s proposed tax cuts would take effect in 2003. Most of the revenue reduction would take place in the long-term, hardly a kick-start of the economy in the near future.
Well, if none of the reasons for a tax cut stands up, why is Congress even debating one? It isn‘t fair and doesn‘t accomplish what was intended. This proposed reduction is bribe - pure and simple. Politicians think we stupid enough (hopefully, they are wrong) to vote them back into office if only our taxes are cut by $50 or so periodically.
The U.S. income tax system needs to be reformed for sure, maybe even eliminated. Yet, erratic tax cutting to make Americans happy in the year before a national election does not constitute an economic policy. When the financial markets and economy were roaring in the 1990‘s there were no tax cuts instituted. The distinguishing feature of our government‘s policy during that era was the priority it placed on balancing the federal budget.
There were no new tax cuts then and it makes less sense now.