SAN FRANCISCO — The richest US citizens are paying a declining share of their income even as their incomes grow more rapidly than everyone else's does. Yet President George W. Bush announced a budget that includes a tax cut proposal that will give the wealthiest an even greater share of taxable income. The $1.96 trillion spending package consists of tax cuts for the rich, a huge giveaway to the war industries and cuts in social services that will greatly impact the lives of working people.
Moreover, this plan is offered as the new administration pushes for a recession to get the new budget adopted. Although the US is not yet in an official recession — it requires a decline of two consecutive quarters of gross domestic product — consumer spending is receding and layoffs are rising.
The disparity in wealth between the top and bottom layers of taxpayers in the United States is the greatest of all developed countries. In fact, the wealth gap (particularly for blacks and other racial minorities) widened under the Democrat President Bill Clinton. Bush and the Republicans see an opportunity to go even further to make the poor pay for the wealth of the rich.
According to data that the Internal Revenue Service gave New Jersey Republican Jim Saxton, who is chairperson of the Congressional Joint Economic Committee, the top 1% of taxpayers made big income gains over the last 10 years of the economic upturn.
In an analysis of this data by the Center on Budget and Policy Priorities (CBPP), a nonprofit research organisation in Washington, DC, that promotes the interests of the poor, the 1998 income, after taxes, of the top 1% of taxpayers increased at more than three times the rate of the bottom 90%.
An article in the February 26 New York Times summarised the findings. "Over a longer period, from 1989 to 1998", the article stated, "the incomes of the richest 1 percent, adjusted for inflation, grew about eight times as fast. But the share of their income they had in federal taxes in 1998 was at its lowest level since 1992, the year before Congress added two higher tax brackets that apply only to top earners."
"This group", the article continued, "whose 1998 gross income averaged $816,189, paid 27.1 cents of each dollar earned in federal income taxes, down from 27.9 cents in 1997 and 28.9 cents in 1996." In comparison, "For the other 99 percent of Americans, the share of income going to taxes was nearly unchanged, at 11.5 percent of income in 1998 and 1996 and 11.7 percent in 1997."
In other words, under the new Bush tax cuts, the top 1% would get 40% of the breaks, more than their 18.5% share of income taxes paid!
The actual income comparison is even more striking. According to the CBPP's analysis, the top 11% average after-tax income is $594,814 in 1998, up $69,000 or 13.1% over 1997. But the bottom 90% — everyone who made less than $83,220 in 1998 — saw their average income rise by $984 from 1997, just 3.9%.
Robert Greenstein, director of the CBPP, explained: "Over all, 12 million families with 24 million children — one of every three children in the United States — would receive no tax reduction. Some 75% of these are working families. Some 55% of African-American children and 56% of Hispanic children live in families that would receive nothing from the proposed tax cut."
Bush and his supporters' response to criticism of the unfair tax system and his budget proposals is to charge that opponents are "fomenting class warfare." But as Molly Ivins, a progressive journalist based in Texas noted in a column for the Forth Worth Star-Telegram: "As you may have noticed, rich people are not staggering under their burden of taxationthere are more of them, and they're richer than ever. If this is what the right calls 'redistribution of wealth', it's working fine right now to pump money from the poor to the rich."
Of course, what the Bush's budget and tax cuts reflect is the normal everyday nature of the capitalist system — greed for some, suffering for most.
There is class warfare. But it is a one-sided war against working people.
The challenge for the 90% who are not part of the super-rich ruling elite is to break with the politics of the wealthy and their parties, and begin to organise mass campaigns demanding a people's budget with tax cuts that only benefit working people.
BY MALIK MIAH