â€œHOW THE OTHER HALF PERCENT DIEâ€?
By Jack Rasmus, copyright 2005
ILWU â€˜Dispatcherâ€™, October 2005
After more than four years of incessant tax cuts for the wealthy and corporations, George W. Bush and Co. are now preparing to come back to the table for another huge tax cut feast at the expense of workers and consumers in America.
Congress has passed record tax cuts every year from 2001 through 2004, with more than 80 percent being distributed to the wealthiest taxpayers and corporations. Last April the House of Representatives passedâ€”and now the Senate is considering, another $1 trillion handout to the rich by repealing the Estate Taxâ€”a tax heirs of the super rich pay when the head of the familyâ€™s estate dies and leaves his or her property to them as beneficiaries.
Even before the current proposed Estate Tax cut, the tax burden in the U.S. has been shifting dramatically for the last several decadesâ€”with workers paying relatively more and the wealthiest one percent of households paying progressively less.
In 2000, the year before Bush took office, the Estate Tax applied to only two percent, or 52,000, of the 2.5 million heads of households who died that year. And for that two percent, there was still a $1.35 million deductible before a 55 percent tax rate on the estate applied.
Following Bushâ€™s 2001 Estate Tax cut, less than one percent of wealthiest families remained subject to the tax. By 2005 the 52,000 eligible for the tax had been reduced to only 13,700 out of the more than 2.6 million heads of households projected to die this year. And even their deductible level has been raised to $4 million and their tax rate has been reduced to 45 percent. Furthermore, under the current law, by 2009 the deductible will rise to $7 million, and only 2,400 will be subject to the tax at that time.
Still, Bush and his wealthy backers have been pressing hard throughout 2005 for immediately and permanent repeal of even todayâ€™s watered-down Estate Tax. Even though that tax is scheduled to disappear altogether after 2009, they are refusing to wait four more years.
Hurricane Katrina recently dealt a wild card into the table stakes Estate Tax cut game, however. With what looks like $500 billion at minimum needed to rebuild the Gulf Coast, it may prove difficult (though not impossible) for pro-corporate/pro-wealth interests to pass another $ 1 trillion tax cut for the wealthiest one percent of taxpayers at the same time.
So as a contingency Bush and the pro-wealth interests in Congress have developed a fall back position nearly as generous in the event a permanent repeal of the tax is not immediately possible. Led by Senator Jon Kyle (R-AZ), an alternate proposal in the Senate at present is to raise the Estate Taxâ€™s exemption immediately to $7 million (or higher) and immediately reduce the 45 percent tax rate to 15 percent. That would produce a tax cut of more than $700 billion over the coming decade alone, with more to follow, for the wealthiest 0.3 percent of households left subject to the tax. Even that $700 billion is probably an underestimation, since other provisions in the legislation, as well as cases before the courts at present, will render existing state-level Estate Tax laws null and void as well.
Should Bush and corporate America succeed in repealing the Estate Tax and making Bushâ€™s 2001-2005 tax cuts permanent the nonpartisan Center on Budget and Policy Priorities estimates the total long-term cuts will amount to no less than $11.6 trillionâ€”80 percent of which once again will accrue to the wealthiest 20 percent of households and the largest corporations.
To give a sense of the magnitude of $11.6 trillion in tax cuts: that money would eliminate Bushâ€™s alleged $3.4 trillion shortfall in Social Security, fully resolve the real growing crisis in Medicare funding and provide free prescriptions drugs for all Americans in needâ€”not just partial payment for drugs for those in retirement.
But even this $11.6 trillion is not the full picture. To cap off his tax legacy on behalf of corporate America in his second term, Bush wants to totally restructure the entire tax code. The campaign to do that kicked off recently with the release Sept. 30, 2005 of the final report of Bushâ€™s appointed special Advisory Panel on Tax Reform. Expectations are that the panel will recommend, and Bush and Congress eventually propose, not only further breaks for the wealthy and corporations, but also a scaling back of many of the token tax cuts given to workers and consumers between 2001-04 that were considered politically necessary at the time to ensure passage of Bushâ€™s first-term tax cuts for the wealthy. In addition, the panelâ€™s report is expected to launch a new assault on the few remaining benefits in the federal tax code that working class households have been able to take advantage of for many years, such as home mortgage interest, state and local tax deductions and deferral of taxes on health insurance premiums.
A more detailed treatment of the â€˜Great American Tax Shiftâ€™ is contained in Jack Rasmusâ€™s just released book, THE WAR AT HOME: THE CORPORATE OFFENSIVE FROM RONALD REAGAN TO GEORGE W. BUSH, which can be purchased from the website, http://www.kyklosproductions.com, or soon on Amazon.com.