Tax Obscenity

Here we are six months before a mid-term election, with polls showing only about 20 percent of the American public approving the job Congress is doing. The federal budget deficit is still out of control. We’ve got a war going on. So what’s Congress giving us now? A $70 billion tax cut.

The tax cut would be politically irresponsible, but not obscene, if it went to middle-income workers now facing sky-high fuel prices and soaring health-insurance costs, and variable-rate mortgage payments heading through the roof. But this tax cut is mostly going to people who are already very comfortable. Hence, it’s both irresponsible and obscene. 87 percent of the benefits of this tax cut will go to the 14 percent of American households earning above $100,000 a year. Twenty-two percent of the benefits will go to the richest two-tenths of one percent of American households earning more than a million dollars a year.

I’d appreciate it if someone could explain to me why we need another tax cut for high-income Americans especially when the gap between the rich and poor, and between every rung on the income ladder, is wider than it’s been in almost a century. Some administration apologists, including the editorial page of the Wall Street Journal, claim repeatedly that the rich are paying a larger-than-ever share of income taxes, so it’s entirely fitting that they get the lion’s share of any tax cut.

This logic conveniently leaves out two facts. First, the rich are now paying a smaller percentage of their income in taxes than at any time in the last seventy-five years. That they pay a lot of taxes nonetheless is a by-product of the mind-boggling increase in their income and wealth relative to most other Americans. Second, if you consider not just income and capital-gains taxes but all the taxes people pay – including payroll taxes and sales taxes – you find that middle-income workers are now paying a larger share of their incomes than people at or near the top. We have turned the principle of a graduated, progressive tax on its head.