Posted on: Tuesday, August 17, 2004

EDITORIAL
Bush tax cuts are shifting the burden

A new bipartisan Congressional Budget Office study makes it easier to sort out the opposing spins of the Bush and Kerry campaigns on a complex but crucial issue, federal taxes.

The Bush campaign is right when it says the president, through his vaunted series of tax cuts, "has lowered taxes for every American."

That's not to say, of course, that he lowered taxes with anything approaching equity. The CBO study shows the combined Bush tax cuts lavished all of $250 each on those in the bottom 20 percent of households. The middle 20 percent saved $1,090, while the top 1 percent pocketed $78,460.

Democratic candidate John Kerry is equally right in saying that because of the Bush tax cuts, "the burden of taxes has shifted from the wealthy to the middle class."

The CBO study shows that the wealthiest 20 percent saw their share of total federal taxes drop from 64.4 percent in 2001 to 63.5 percent this year.

The top 1 percent, earning more than $1 million a year, saw their share fall to 20.1 percent of the total, from 22.2 percent.

Middle-income taxpayers, meanwhile, saw their burden rise from 18.7 percent of all federal taxes to 19.5 percent.

By failing to give the biggest cuts to working people who would quickly spend them, Bush's tax cuts have been relatively ineffective as an economic stimulus and singularly ineffective in producing new jobs.

The study adds weight to the argument that Bush's tax policies are not only accelerating growth of the gap between rich and poor, but threatening the very existence of that quintessentially American post-World War II phenomenon, a viable middle class.

While we accept the argument that tax policies should encourage investment, Bush's proposals, if fully adopted, could eliminate almost all taxes on investment income and wealth. That implies a system in which only labor income is taxed.

And because all of us got a tax cut, however unequally, at the same time that we went to war in Iraq, the Bush tax policies leave a rapidly expanding national debt for our children to repay.

John Kerry's tax plan is far from perfect. It doesn't add up that health insurance can be expanded to millions who now don't have it — and the deficit can be reduced — merely by raising taxes for those making more than $200,000 a year.

But Kerry's tax plan is not as imprudent as Bush's.