Another Tax Cut for the Rich

June 3, 2003

As The Worker goes to press, Bush is about to sign a new tax bill which provides yet another massive tax cut for the rich. This will be third tax cut for the rich passed by the Bush administration in the last two and a half years.

The new law mandates tax cuts of at least $330 billion but this figure would increase to $800 billion if, as expected, new tax rates remain in effect over the next 10 years. Nearly all of these cuts will go to the rich. The most important provisions of the new bill include cuts in the tax rate on stock dividends (from 38.6% to 15%) and capital gains (from 20% to 15%) and increases in the business depreciation allowance, enabling corporations to immediately deduct 50% of the cost of new investments. The bill will also decrease the tax rate for the highest income bracket. The great majority of workers and the poor will get little or no tax relief from Bush's new law.

According to a study by the Citizens for Tax Justice, over the next 4 years, the 20% of Americans in the lowest income group will see their tax cut by only $45 while the wealthiest 1% of the population will receive, on average, a windfall of $107,095 in tax relief. Altogether 80% of the tax cuts will go to the wealthiest 20% of the population.

Bush's tax cuts are part of his general economic program of helping the rich get richer while attacking the working people. While the taxes on corporations and the super-rich are cut to the bone, Bush is forking hundreds of billions of taxpayers' dollars over to the big corporations in the form of military contracts, interest payments, privatization of government services, research and development grants, etc. Already Congress has approved, in a nearly unanimous vote, a $400 billion military budget for the coming year.

One immediate result of this fiscal program of slashing taxes while militarizing the economy and lavishing public monies on the corporations, is that the government is again running up huge deficits. Economists already project a $400 billion federal deficit for coming year, by far the largest ever. The deficit, in turn, is used as an excuse to dramatically slash vital public services and social programs which help the working people keep life and limb together. Already, state and local governments across the country are slashing funds for public education, Medicaid and public health, etc.

In short, the government uses its vast power to tax and spend to redistribute the wealth of the country out of the pockets of the working people and into the pockets of the capitalists.