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02/25/2010 Entry:
Where Did All the Tax Cuts Go?
The primary message of Republicans is tax cuts: We must have tax cuts to make the economy grow, to produce jobs, to reduce the deficit, to fight terrorism, to increase American freedom.... Tax cuts are the cure for everything. And reduce taxes is exactly what George W. Bush did during his 8 years in office. YOUR taxes did not decrease. MY taxes did not decrease. So where did all the tax cuts go?
Kevin Drum at Mother Jones provides the answer with this diagram:
The red line shows what happened to income tax rates of households with income of $1 million and more from the '90s until 2007. It went down precipitously from about 30% to 16%. Take a look at the blue line that represents what happened to the top 400 households. They did better than anyone.
What happened to the rest of us? Not much change in income, unless we lost income due to job loss. Not much change in taxes. For the most part we pay a higher rate than the millionaires and billionaires. If you work as a store clerk or a bank clerk or as a factory worker, your tax rate is greater than that of someone who does not work at all but stays home collecting money from investments.
The tax code is riddled with all sorts of gimmicks to allow rich people to evade paying taxes. One of the worst is the so-called capital gains tax, which supposedly increases investments that produce jobs. All it really does is make the rich richer. Another great tax loophole is deduction for losses. These loses need not be real; they may be due to something like "depreciation," a boon to real estate investors.
Michael Hiltzik, in today's L.A. Times, presents a case about the McCourts, who use "losses" to bring their taxes down to zero:
The McCourts, who own the Los Angeles Dodgers (so she says; he says he's the owner and she's not), jointly pocketed income totaling $108 million from 2004 through 2009, according to documents Jamie McCourt recently filed in the couple's divorce case in Los Angeles County Superior Court.
On that sum, they paid zero federal and state income tax. Jamie suggests that some tax breaks will apply this year too.
What's meant by "losses"? Jamie's lawyer, Bert Fields, answers: "They're tax losses. I don't mean real losses."
Another form of "loss" they used is depreciation. The depreciation is not real either. It's a "loss" only to show the IRS.
The tax code is packed with such goodies to allow rich people to reduce their taxes. Who do you think pays? You and I. You see, someone has to pay taxes. So when you cut taxes for the rich, the rest of us have to pay.
Where did all the tax cuts go? To the rich. To make sure they continue to get tax cuts they give generously to Congress. If you and I want tax justice we must break up this symbiotic arrangement.
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