Bush Tax Cut No Benefit
For Most Americans
By James Donahue
By now most wage-earning
Americans are discovering to their horror that the big Bush tax cut did not filter down to them. Instead of realizing a break
in income tax debt for 2006, we are discovering that the tax we owe has increased.
This writer and his spouse
feel fortunate in that we were only hit for an extra $125. An acquaintance, who thought she had more than enough money withdrawn
from her weekly salary to cover her tax debt and perhaps deliver a check to cover the surplus, was shocked to learn that she
owes another $2,000 in income tax.
We suspect people across
the land are silently making this same discovery as they wade through the complexities of calculating their annual income
tax returns, or are paying professional people to do it for them.
Yet our legislators approved
that much touted tax cut, in spite of warnings by economists and a number of wise newspaper editorial writers that a three
trillion dollar federal budget does not warrant a reduction in tax payments at this time.
So if there was a change
in the tax laws, what happened? It should not be hard to guess. The tax law was changed, all right, giving more benefits to
the wealthy and hitting the moderate wage earner harder than ever before. Those of us on the working front line, sweating
on the job for the boss in his ivory tower, are bearing the brunt of the Bush big-business financial rape of the masses.
A New York Times story
just one year ago noted that a Congressional study revealed that high income families saw sharp drops in federal tax rates
while the tax rates for middle-income earners “edged up.”
The story said an exhaustive
analysis of tax records and census data “reinforced the sense that while Mr. Bush’s tax cuts reduced rates for
people at every income level, they offered the biggest benefits by far to people at the very top.”
The arithmetic for basic
formulating of income tax is relatively simple. People at the poverty level, $7,825 and below, held steady with a tax payment
of 10 percent of their income, as did sub-standard wage earners from $31,850 and below, at 15 percent. That covers most retired
folks and single mothers struggling to make ends meet by such jobs as working as waitresses at restaurants, store clerks and
cleaning motel rooms.
People in the “middle
income” bracket, from $31,650 to $77,100, enjoyed a reduction in tax from 28 percent to 25 percent. The scale of tax
reductions drops more dramatically as annual incomes rise.
So if there was no flat
raise in taxes for anybody, and even the low income earners remained at 15 percent, why are we getting hit with bigger tax
bills this year you might wonder?
Written into every tax
law is a complex formula for calculating not only the taxable income generated throughout a year, but also a variety of tax
deductions, thus helping us escape the clutches of full payments to the tax man. Most of us pay our professional tax providers
well to get the training needed each year to understand the changes in the tax code and use this knowledge to help us do this.
Thus while a new bill
may give the appearance of a tax reduction, it also can have hidden alterations written into it that take away many of those
tax loopholes, once available to even the poorest of wage earners, and give them only to the rich.
Thus the law might say
a man earning a salary of $500,000 a year might be taxed up to 35 percent of his money, after he utilizes all of the loopholes
and tax deductions awarded him by the law, he ends up escaping any tax payment whatsoever.
Those of us at the lower
end of the spectrum, in the meantime, are forced to pay the difference.
After all, the Bush Big
Business machine has to get all those trillions of dollars to stuff in their pockets from somewhere.