Dick Cheney doesn't want the Democrats to tax wealthy people more and middle income people less. As the New York Times reported on Saturday, he joins a "chorus of Republican opposition" to overhauling the tax code to undo the preference for the rich built into the amendments made over the last six years. See Steven Lee Myers, Cheney Attacks Democratic Plan to Revamp Tax Code, NY Times, Oct. 27, 2007.
In spite of the fact that the Rangel plan is designed to be revenue-neutral, Republicans choose to characterize it as "the mother of all tax hikes." I suppose that is because their focus is on the people at the very top of the income distribution curve who will pay somewhat more taxes than they currently do, because of the proposed 4-4.6% surcharge on their income. The Rangel plan, of course, would eliminate the AMT for all taxpayers and provide tax reductions for married couples with annual incomes below $200,000. So more folks would get a tax cut than would get a tax increase, in that revenue-neutral plan.
It is discouraging that politicians engage in such rhetoric rather than discussing the real issues. How are we to afford all of the expensive spending that the Bush administration has undertaken? The New York Times had an article today showing that George W. Bush is the biggest spender of history: those multiple wars and the weaponry used in them cost an awful lot of money. We pay private companies a lot more than we pay our own soldiers to do our dirty war work for us. And health care is going to be a bigger and bigger item for Americans in the future, as our population ages. It is simply irresponsible to adopt cutting taxes as the answer to everything. Americans are more sensible than the politicians give them credit for being.
That brings up the other silly item in this report of Cheney's interview. Cheney credited the Bush revenue reductions with "driving this economy." It doesn't seem to occur to Cheney that what drives an economy are the real productivity of its people and the real output of its businesses. It is highly unlikely that the tax breaks enacted primarily for the benefit of the wealthy have added to that productivity and output--it is just as likely, it seems, that the money saved has been shifted to offshore trusts or foreign equities where it doesn't help the US economy. Tax cuts no more drive an economy than the cowcatcher drives the train.
In fact, there is considerable support for the assumption that lowering taxes on middle and lower income people, and adding a refundable dredit for workers at the bottom of the economy, do make a difference to overall economic growth. People at the lower end of the income distribution do consume more when their taxes go down and certainly when they receive a refundable "demigrant". That increased consumption supports businesses and reves up the economy. So the Rangel plan should be a better driver of the economy than the Cheney-Bush plan with all the tax breaks for the capital gains and dividends of those at the top.
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