Tax Cut Robin
Hood In Reverse
by John Davis
We have all heard the story of Robin Hood,
and how he robbed from the rich and gave to the poor. Washington is
not Sherwood Forrest, but there seems to be a modern day Robin Hood
on the prowl. However, this story is playing out in reverse, because
the new Robin Hood is taking from the poor and giving to the rich.
President Bush has just pushed through a bill that includes $320 billion
in tax cuts. However, some estimate the true cost of the bill is about
$810 billion, making it the third largest tax cut in history. The bill
accelerates tax rate reductions, including the top tax rates for upper
income persons. It also reduces taxes on dividends and capital gains.
To pay for the tax cuts, Congress had to approve budget cuts to health
care, education and homeland security and borrow from Medicare and Social
Security. For months, the public has urged Congress to strengthen the
future of these priorities instead of committing needed resources to
tax cuts for the rich. But, the measure passed mostly along party lines.
The 231–200 House vote May 23 was followed by a 51-50 Senate vote,
with Vice President Dick Cheney casting the tie-breaking vote. It should
be noted that only seven Democrats voted for the tax cut, one of which
was Representative Bud Cramer from the 5th District of Alabama.
So just who benefits from this tax cut? The average tax cut for the
richest 1 percent over the next four years will total $107,095, while
tax cuts for the bottom 60 percent of taxpayers will average less than
$100 a year for the next four years, according to Citizens for Tax Justice.
Low-income taxpayers—the bottom 20 percent—will receive
a $15 tax cut the first year, a sum that will decrease to $1 by the
fourth year of the tax scheme. Overall, the House-passed version scales
back sharply the already modest middle-income tax cuts included in earlier
bills by phasing out those provisions in two years.
Two of the nation’s richest men, billionaire investors Warren
Buffett and George Soros, have spoken out against the tax cuts, saying
they will not help the U.S. economy—as Bush has said in selling
the tax plan. Soros said in an interview with the CNBC that the dividend
tax plan was “basically using the recession to redistribute income
to the wealthy.”
The first round of tax cuts came in February of 2001. President Bush
stated at the time “Today, I am sending to Congress my plan to
provide relief to all income taxpayers, which I believe will help jump-start
the American economy...Americans are hearing, and some feeling, the
economic slowdown...A warning light is flashing on the dashboard of
our economy. And we just can’t drive on and hope for the best;
we must act without delay.”. Instead, the opposite happened. In
the six months between the introduction of the tax cut and the terrorist
attacks of September 11th, Labor Department data show that almost 500,000
jobs were lost. While the White House has claimed that the unemployment
crisis was due to September 11th, this data prove that clearly is not
the case.
According to the Bureau of Labor Statistics (BLS), total non-farm employment
in January 2001 was 132,413,900. The latest data from January 2003 shows
that total non-farm employment is now 130,089,400 — a loss of
more than 2.3 million jobs in just two years.
At the same time tax cuts are being passed for the wealthy, working
Americans are feeling the pinch. The Bush administration wants to require
working poor families to submit extensive new documentation to prove
their eligibility for the Earned Income Tax Credit (EITC). Supported
by President Reagan, the EITC provides a crucial safety net for low-income
working families. To be eligible for EITC, a family cannot have an income
above $34,692 and the actual amount of the credit varies depending on
family size and income. The Internal Revenue Service (IRS) claims the
new rules are designed to prevent between $6.5 billion and $10 billion
in improper EITC payments, but tax experts say that the documentation
requirements are likely to discourage many eligible families from applying
for EITC. In addition, studies show improper payments to non-EITC individual
filers amount to $132 billion plus another $70 billion to offshore corporate
accounts and $46 billion for corporations. But while Bush requested
some $100 million and 650 new IRS employees to track EITC filers, other
tax investigations have fallen by 37 percent and prosecutions by 50
percent.
While the tax burden is being shifted, attacks are also being waged
on laws that protect workers. H.R. 1119 (The Family Time Flexibility
Act) is currently in process in Washington. The real agenda of this
bill is hidden behind the name. Proponents of this bill will tell you
that it give families a chance to trade overtime for additional time
off from work. What they don’t tell you is this time off is at
the employers disgression and not the employee. Union represented employees
would not be affected, because overtime is covered with their agreements.
However, non-union employees would be potentially giving up overtime
pay for anything past 40 hours. The company would have the right to
issue “comp time” in lieu of overtime pay. This “comp
time” would be at the company’s choosing and not the employee.
This bill virtually eliminates the Fair Labor Standards Act. The Fair
Labor Standards Act (FLSA) of 1938 established the traditional 40-hour
workweek so workers could spend more time away from work with their
families. But the FLSA’s only incentive for employers to adhere
to the 40-hour workweek is the requirement that they pay time-and-a-half
cash wages for overtime work. H.R. 1119 would remove this fundamental
requirement and allow employers to pay nothing for overtime work at
the time the work is performed—in exchange for a promise of future
paid leave.
While it is true that union workers will not be affected directly, there
will be an indirect affect. This bill would further limit job growth,
by enabling companies to force additional overtime on employees, eliminating
the need to hire new workers.
Something has to be done to stop this war being waged against America’s
working class. We must send a message to our elected officials to stop
this trend. This year’s budget contains massive cuts to social
spending such as Medicare and Social Security. CEO of the American Association
of Retired People (AARP) Bill Novelli recently released a statement
condemning the $215 billion cut to Medicare and Medicaid. AARP has also
come out firmly against proposals to privatize Social Security.
The legend of Robin Hood has him stealing from the rich and giving to
the poor. Technically we should never steal, because after all stealing
is a crime. However, when you are stealing from the poor and giving
to the rich it worse than a crime. That is a crying shame that is far
from moral. Contact your elected representatives and let them know that
we are disappointed in this “Robin Hood in Reverse”. |
