U.S.: Bush to propose further tax cuts in Economic Stimulus

The Bush administration is gearing up to promote their new "economic stimulus" package to be announced on Tuesday. The New York Times reports that the plan will eliminate a tax on corporate dividends paid to shareholders which amounts to $300 billion loss to the federal budget over 10 years. They hope that the elimination of the corporate dividends tax will result in the return to a booming stock market. In other words, this is a tax cut for the rich. The right-wing proponents of tax-cuts for the rich argue that the benefits will eventually "trickle down" to the rest of us. The idea is that if rich capitalists have more money, they will invest it in the economy which will in turn create jobs. But this is not the most effective way to stimulate the economy and job growth. Capitalist do not invest money to create more jobs. They invest to make more money. In fact this plan to cut taxes will ultimately hurt the working class because it will create a hole in the budget which will most certainly be followed by calls for reductions in government spending. In other words, it will ultimately mean cutting services and benefits to the needy in a time when the government should be doing more to help out.

The proposed tax cut is part of an on-going attack on the working class. The right-wing Republicans, who are often putting liberal Democrats on the defensive for engaging in "class warfare," are effectively doing the same — but on behalf of the wealthy upper-class. Every day on his radio show conservative apologist Rush Limbaugh attacks the notion of a progressive tax system. He does so by distorting facts and obscuring the truth. For instance, he cites IRS statistics stating that the top 50% of wage earners pay 96% of income taxes. This is true but he he doesn't compare it to the share that the top 50% of wage earners share of adjusted gross income (which is 87%). A more useful statistic to look at would be the average tax rate which is 16.86% for the top 50% of wage earners which is not much more than the 15.26% average for all wage earners. What does this mean? It means the U.S. does have a modestly progressive tax system which the right would like to get rid of.

It is time for those on the left to defend progressive ideas and not back down from the class warfare being waged by the American Right. It is time to defend the idea that "from each according to his ability, to each according to his needs...."

Related websites:

• Economic Policy Institute

Related articles:

• Bush to Unveil Economic Plan (National Public Radio, January 7, 2003)
• Bush's Stimulus Plan Would Eliminate Tax on Dividends (New York Times, January 6, 2003)
• Senate Dems Mixed on Bush Economic Plan (Associated Press, January 6, 2003)
• Democrats Pounce on Bush Stimulus Plan (Associated Press, January 4, 2003)
• Generating Jobs and Growth: An economic stimulus plan for 2003 (Economic Policy Institute, December 2002)