April 2001

Views expressed are those of the authors, not necessarily of the AFSC.

The Bush Tax Cut--Beware of Pretty Packages

Chris Hartman works with United for a Fair Economy <research@ufenet.org >

Once again, conservative forces in Congress are pushing enormous tax cuts for the few wealthy, at the expense of everyone else.

Already, President Bush's tax plan for an "across the board" tax rate cut has passed the House of Representatives. Also on deck are an elimination of the "marriage penalty," and repeal of the estate tax. Bush is traveling around the country promising people he's going to give us a "refund" for supposedly overtaxing us in recent years.

But beware of pretty packages. Remember that wealthy campaign donors to candidates and conservative think tanks have spent the last decade figuring out how to package these tax cuts to convince you of their righteousness.

The key questions are: Who will benefit? What will be lost? We know, for instance, that 43% of the benefit of this tax cut will accrue to the wealthiest 1%. We also know that despite Bush's proclamation that "we have met our needs," we in fact face a host of pressing public needs. Forty-three million Americans without health insurance and with crumbling, overcrowded, ill-equipped public schools are but two prominent examples. Is a tax cut for the wealthy really more important than improving health care and education for everyone?

The best indicator of the unfairness of the Bush tax cut is his proposed repeal of the estate tax, a tax that falls only on the richest 2 percent of households. To be subject to the tax, an estate must exceed $675,000--or $1.35 million per couple. That exemption is already set to rise to $2 million per couple by 2006. Eliminating the estate tax will mean that the 4500 richest taxpayers will get a tax cut equal to that received by 140 million Americans in low and moderate income households.

A lavish media campaign has convinced millions of people that somehow their taco stand, newspaper delivery business, or video store stands in peril of the "death tax," when in fact their net worth lies far below the taxable limit. We hear about the plight of small farmers who are supposedly forced to sell the farm because of estate tax penalties. In fact, the rare cases when this happened were virtually eliminated by the 1997 reforms. For the one in twenty farmers who owe any estate tax at all, the average payment due is about $5000.

We can raise exemption levels and strengthen protections for family farms and small businesses to ensure that the estate tax excludes all but the very wealthiest Americans. In fact, there is alternative estate tax reform legislation--but conservative tax cutters won't let it come to the floor. They want it all.

Why should we maintain an estate tax? First, it raises significant revenue, $28 million a year, from those most able to pay. Over half the tax is paid by the richest 2900 households in the US each year, families that in 1998 had estates of over $5 million in assets.

Tax revenue loss from elimination of the estate tax will total over $1 trillion over the next 20 years. That lost revenue will have to be made up in one of two ways: increased taxes on those less able to pay or cuts in Social Security, Medicare, environmental protection, and other government programs.

Second, the estate tax encourages the very wealthy to give to charity. Repeal would have a devastating impact on public charities, including higher education, land conservancies, and organizations that assist the poor and disadvantaged.

"100 Chairs," street theater which graphically displays the actual distribution of the world's wealth among its inhabitants. Photo: United for a Fair Economy

Third, it would fuel greater concentrations of wealth and power, posing a threat to our democracy. Today, wealth is more concentrated than at any point since the 1920s, when the richest 1% of the population owned over 40% of all private wealth. At that time, Supreme Court Justice Louis Brandeis warned "We can either have democracy in this country or great wealth concentrated in the hands of a few, but we can't have both."

Further concentrations of wealth and power will further weaken our democracy, where half of the electorate doesn't bother to vote. We can already see the distorting effects on our elections of massive corporate contributions, candidates who must be personally wealthy to win, and the ways in which elected officials become beholden to the mega-donors who funded their campaigns.

That's the whole reason we are even considering the repeal of the estate tax. It's payback time, and this is the policy priority of the donor class.

Fortunately, Bush's tax plan is beginning to meet some grassroots opposition. A massive and unprecedented coalition of coalitions called "Fair Taxes for All" launched a campaign against the Bush tax plan in early March. The coalitions joining forces in this nationwide effort include the Leadership Conference on Civil Rights, the AFL-CIO, the Invest in America Coalition, the Coalition on Human Needs, the National Council of Women's Organizations, and the National Low-Income Housing Coalition. They represent a wide diversity of organizations including civil rights, labor, women's, environmental, disability, religious, gay and lesbian, health care reform, campaign finance reform, good government, older Americans' and children's groups, and more.

There is also a rising call to preserve the estate tax, coordinated by Boston-based United for a Fair Economy. UFE's Responsible Wealth project placed an advertisement opposing repeal of the estate tax in the New York Times on Feb. 18. The ad was signed by Bill Gates, Paul Newman, and financier George Soros, and since its publication has attracted over 700 additional signers to the organization's website, www.responsiblewealth.org. The ad succeeded in cracking open a nationwide debate on the merits of estate tax.

Politically, it is often useful to have an alternative tax plan to be for, rather than just being against something. The Progressive Caucus, an organization of 54 Congressional Representatives plus Senator Paul Wellstone, has proposed an alternative tax plan that would return an annual "people's dividend" of about $300 to every single American, as long as surpluses were maintained. This dividend plan would cost about half of President Bush's plan while providing more tax relief to the majority of Americans.

What action can concerned people take to make sure that the final tax plan is as fair as possible? As always, it is important to contact your Congressional Representatives and Senators. The best form of contact is a personal letter. (Calls and emails are less effective.) These letters are logged and do make a difference in how Members of Congress ultimately vote. To find the addresses and phone numbers of your Representatives and Senators, check the US Government section of your White Pages, under "Congress-United States." Or you can send letters to your representatives at the Senate, Washington, DC 20510, and the House of Representatives, Washington DC 20515. Right now it looks like the final tax plan will take shape in the Senate, so letters to Senators would be the highest priority. Check the United for a Fair Economy website <www.ufenet.org> for more information on getting involved.

ACTION

The Friends Committee on National Legislation is coordinating a sign-on letter from national groups to members of Congress expressing concern about President Bush's budget priorities, and suggesting an approach that redirects huge tax cuts and excessive military spending toward programs to meet human needs. Contact FCNL to add your organization's name to the letter <fcnl@fcnl.org> or phone 202/547-6000; www.fcnl.org (The letter text will be posted on this website.)

LOCAL GROUPS Meet with/call/email your members of Congress. The FCNL sign-on letter offers good information and perspectives for your use. For a copy visit the FCNL website (above), or email membership@wand.org

National Priorities Project GRASSROOTS FACTSHEET: The Impact of Repealing the Estate Tax on Your State--what the repeal could cost each state and what that money could buy in community-based services. The Factsheet for all 50 states: www.nationalpriorities.org

For sample media materials and an estate tax action alert: pamela@natprior.org

To connect to the national campaign against the repeal, contact United for a Fair Economy, 800-JOIN-UFE or www.ufenet.org

An Open Letter to the New Administration and Congress:

President Bush has declared that he intends to be "everybody's President."

For the one-third of American families who struggle daily to feed, house, and care for their children, this is an excellent sign. Over 30 million Americans live in poverty and frequently go hungry, 43 million are without healthcare coverage, millions of parents can't pay for quality child care, and millions of families pay more than half their incomes in rent so they can't afford other essentials. They badly need Mr. Bush to be their president.

Fortunately, there are proven and fiscally prudent steps that can be taken now to help address these pressing challenges, steps that build on President Bush's proposals and other recent bipartisan initiatives:

• Make sure that, if a tax bill is passed by Congress, it helps all of the nation's families--The best way to do this is to make the President's proposed $1000 per child tax credit fully refundable so all families with children benefit from the tax bill, and more than two million children, most of them from working families, have a chance to be lifted out of poverty entirely.
• Accelerate bipartisan efforts to extend affordable, quality healthcare coverage, including Medicaid and the State Children's Health Insurance Program (S-CHIP), to millions more adults and children who need it.
• Restore health and nutrition benefits to legal immigrants--There is widespread, bipartisan support among members of Congress, governors, and business and labor leaders for reestablishing the safety net for immigrant children, seniors, adults with disabilities, and others in this country legally whose most basic needs have been neglected.
• Make essential investments to strengthen families and communities--President Bush is right to shine the spotlight on education, but " leaving no child behind" also means making sure children arrive at school ready to learn and return each day to safe and nurturing environments. That is why more support is needed for housing and child care, afterschool and summer programs, education and job training, nutrition, community-based support for people with disabilities, and improvements in the safety net so that all families can weather an economic downturn.

These steps are essential to build stronger families, a stronger economy, and a stronger nation. With a record budget surplus, we have historic opportunity to choose the right path. Spending $1.6 trillion on a tax cut targeted to the rich is simply the wrong way to address our nation's real challenges.

The nation has the resources both to strengthen Social Security and Medicare and make needed investments in those children and adults still struggling with poverty, hunger, bad schools and housing, and a lack of health insurance and child care. If President Bush truly wants to be everybody's President, the path to choose is clear.

Signed: American Federation of State, County and Municipal Employees (AFSCME); Bread for the World; Campaign for Jobs and Income Support; Center for Community Change; Child Welfare League of America; Children's Defense Fund; Coalition on Human Needs; Families USA; Food Research and Action Center; National Council of La Raza; National Priorities Project; National Urban League; OMB Watch; The Arc of the United States; United Church of Christ Justice and Witness Ministries

A Message from Granny D

Dear Friend,

It is interesting to me that the same bright senators who think Bill Clinton was wrong to sell pardons don't mind a bit when they themselves sell political policy for campaign donations.

Senator Mitch McConnell of Kentucky is ready to impeach Mr. Clinton all over again. Senator McConnell takes money from the coal mining and other interests all day long, bends every law in their favor (and against the interests of the people he is supposed to represent), and he worries that Bill Clinton is doing what?

I once saw some prostitutes arguing over who had the rights to a particular streetcorner, and this whole thing somehow reminds me of that scene.

Well here is the law of the land that needs to be enforced by our new law-and-order Attorney General: United States Code, Title 18, Chapter 11, Section 201

"Whoever directly or indirectly, corruptly gives, offers or promises anything of value to any public official with intent to influence any official act; Or, being a public official, directly or indirectly, corruptly demands, seeks, receives, accepts, or agrees to receive or accept anything of value personally or for any other person or entity, in return for being influenced in the performance of any official act, shall be fined under this title or not more than three times the monetary equivalent of the thing of value, whichever is greater, or imprisoned for not more than fifteen years, or both, and may be disqualified from holding any office of honor, trust, or profit under the United States."

I urge Mr. McConnell and his friends to dust off this law and use it as they will. I hope that, once dusted off, it will be applied against the way they sell themselves to their campaign donors. I insist that Mr. Ashcroft enforce this law all over town.

I hope you will write your local newspapers and make this point. Bribery of public officials is what we are talking about. Let's end this shameful era in our history by ending the special interest funding of political campaigns and by enforcing the bribery laws, state and national.

I hope you will do that.

--Courtesy the Alliance for Democracy, <www.thealliancefordemocracy.org>

681 Main St., Waltham, MA 02451; 781/894-1179

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