HOW TO WIPE OUT THE DEFICIT: STOP PERMANENT TAX CUTS FOR THE TOP 1%

[JohnWxy]

The tax cuts that the Republicans want to make permanent go mostly to the wealthiest taxpayers. Accordinig to the Citizens for Tax Justice " Over the ten-year period, the richest Americans—the best-off one percent—are slated to receive tax cuts totaling almost half a trillion dollars. The $477 billion in tax breaks the Bush administration has targeted to this elite group will average $342,000 each over the decade." Most of the cuts come in the form of estate tax cuts and Capital Gains tax rate cuts - not cuts on taxes on income earned from work - like most Americans get their income from. This is rationalized by Republicans as a pro-growth program.

Actually, tax reductions to the very wealthy do not promote economic growth as much as tax cuts to the vast majority of the population who work for a living. A tax cut to the very wealthiest does NOT lead to as much of an increase in demand for goods and services as a tax cut for the more 'average' or typical working family. A tax cut given to households making $50,000 to $90,000 leads to immediate increases in demand for clothes, appliances, cars, etc. This demand for goods and services leads to increased employment and job growth. Increased employment leads to further increase in demand with another input to job growth. THATS how you increase economic growth. Tax cuts to millionaires leads to some increased expenditures for more Porsches (Porsche the last couple of years has seen wonderful increases in sales), high line clothes and luxury homes but will not give you the demand input to the economy that returned taxes to the average working family will.

Additional money available for investment (the rallying cry of 'supply side' economists) doesn't mean much if businesses have no reason to expand. And without increaasing demand for their productrs and services businesses don't have much reason to expand or hire more people. Thus, the additional money available for investment finds little opportunities to participate in. Maybe this is why the housing market has seen such a huge boom over the last several years while the stock market has been pretty lethargic. Lack of reason to expand (not much demand for products) has left little opportunities for the wealthy to make money in the stock market and so the money has flowed into real estate instead. About the only thing you hear the investment banking/brokerage crowd talking about as far as 'action' in the market is 'capital investment' by businesses intended to produce savings in operating expenses. NOte they are not talking about businessses expanding, just investing in new equipment to save money. This seems to be the only thing they see providing investment opportunities - to those who have those extra after tax dollars (from tax cuts) to invest.


Citizens for Tax Justice

A new study released today by Citizens for Tax Justice and the Children’s Defense Fund reveals for the first time who stands to benefit from the 2001-enacted Bush tax cuts in each year from 2001 through 2010. Among the key findings:

Over the ten-year period, the richest Americans—the best-off one percent—are slated to receive tax cuts totaling almost half a trillion dollars. The $477 billion in tax breaks the Bush administration has targeted to this elite group will average $342,000 each over the decade.

By 2010, when (and if) the Bush tax reductions are fully in place, an astonishing 52 percent of the total tax cuts will go to the richest one percent—whose average 2010 income will be $1.5 million. Their tax-cut windfall in that year alone will average $85,000 each. Put another way, of the estimated $234 billion in tax cuts scheduled for the year 2010, $121 billion will go just 1.4 million taxpayers.

Although the rich have already received a hefty down payment on their Bush tax cuts—averaging just under $12,000 each this year—80 percent of their windfall is scheduled to come from tax changes that won’t take effect until after this year, mostly from items that phase in after 2005.

In contrast, the vast majority of taxpayers have already received most of their tax cuts from the 2001 legislation.

For the four out of five families and individuals making less than $73,000 this year, three-quarters of the tax cuts—averaging about $350 this year—are already in place.

Tax cuts for the 19 percent of taxpayers making between $73,000 and $356,000 this year will grow a little over the next four years as the cuts in the upper tax rates continue to kick in, but then will dwindle thereafter. By 2010, the tax cuts for this group will be no bigger as a share of income than they are now.

As a result, freezing the Bush tax cuts at their 2002 levels would have little or no effect on 99 percent of the taxpayers, whose tax cuts are already mostly or completely “frozen.” Only the best-off one percent of the taxpayers will receive significant additional tax cuts if the rest of the Bush tax program continues to be implemented.

IF you think this is a preferable way to pay for the iraq war instead of cutting investments in people through valuable social programs go to www.congress.org and email your Congressmen and tell them so.