|April 17, 2007|
||Tax Day’s Unfairness|
||Go Beyond The Headlines|
||Coffee and Donuts Not Included|
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Since President Bush entered office, he has made tax policy a focus of his domestic agenda. “These are the basic ideas that guide my tax policy: lower income taxes for all, with the greatest help going for those most in need,” said Bush of his “bold and fair tax relief plan.” But a majority of Americans will not feel Bush’s alleged tax relief today, as his tax schemes have disproportionately aided the wealthy, often at the expense of the poor and middle class. For example, in 2005, Bush’s tax changes allowed Vice President Dick Cheney to reap $1.1 million in tax savings, but households in the bottom fifth income bracket only received an average of $20 from the tax cuts in 2006. Dissatisfaction with the state of the economy was a major force driving Americans to the polls in the 2006 elections, but Bush has still failed to deliver a fairer tax plan for Americans. “Despite major increases in outlays for war and security, the President and Congress substantially expanded the already unaffordable tax cuts in subsequent years. The fiscal and moral consequences of these blunders are staggering,” states Robert S. McIntyre of the nonpartisan Citizens for Tax Justice.
A MORE UNEQUAL AMERICA: In part due to Bush’s tax cuts for the wealthy, concentration of income in the United States is reaching record levels. “[T]ax rates faced by the wealthiest Americans have fallen, having also recently shown that the top 1% of American earners got a greater share of national income in 2005 than at any time since the 1920s.” Americans earning over $1 million receive an average annual tax cut of [over] $100,000, whereas middle income families earning between $26,000 and $45,000 receive about $650. A study by the Congressional Budget Office explains that the “growing concentration of income at the top continues a long-term trend.” “The share of after-tax income going to the top one percent rose from 12.2 percent in 2003 to 14.0 percent in 2004,” making that the largest one-year increase in the share of income going to the top one percent in 15 years. The United States is fast approaching a “historic threshold: Should current trends continue — from higher payroll taxes to the potential impact of the Alternative Minimum Tax on middle-class earners — the
TAX BURDENS ON THE POOR: “More than one in six taxpayers in 2004 received the Earned Income Tax Credit (EITC), highlighting its growing role in bolstering the incomes of struggling low-income parents.” The EITC is “a refundable federal income tax credit for low-income working individuals and families,” originally approved in 1975 to offset taxes on the poor and provide incentives to work. Since then, it has been called “the nation’s most effective antipoverty program for working families,” as it helped lift “more than four million people above the official poverty line” last year. But Bush’s 2001 tax plan cut marriage taxes across the board, except for within the EITC, causing “half of low-income married couples to have lower benefits.” The EITC is also unnecessarily complex for lower-income Americans, as more than 70 percent of filers rely on paying commercial tax preparers. Center for American Progress Director of Tax Policy John Irons has documented several ways to improve the EITC’s efficacy for lower-income Americans, including reducing the marriage penalty and creating additional credits for larger families. These changes make the tax code fairer and only cost a fraction of the changes Bush has made, states Irons.
MIDDLE CLASS FACES THE ALTERNATIVE MINIMUM TAX: An increasing number of Americans will be in shock about the Alternative Minimum Tax (AMT) this year. “The individual alternative minimum tax was originally designed to limit tax sheltering and to assure that high-income filers paid at least some tax.” But Bush did not index the AMT to inflation and left it out of his original tax scheme; now it threatens to increasingly affect the middle class. “Unless the tax law is changed, some 23 million — 17 percent of all filers — will be subject to the AMT when they file in 2008,” in contrast to the 3.7 million facing the AMT this year. Middle class citizens are being squeezed by the tax. One disgruntled taxpayer said that “the money she would ordinarily use for a vacation or to buy a piece of furniture will not be there. Instead, her family’s annual income of $75,000 would be subject to the AMT. Unless something happens, she says, ‘something will get cut from the family’s budget.'” Any reform of AMT must make sure that wealthy Americans can no longer use loopholes to avoid their income responsibility, as capital gains are only taxed at 15 percent and “are not classified as sheltered income subject to the alternative tax. The result is that the richest taxpayers get a windfall while the burden shifts to others.”
AN UNPRODUCTIVE REVENUE SERVICE: Reports show that the Internal Revenue Service has been increasingly “unproductive” in corporate audits. “[T]he IRS is wasting more and more of the time of its revenue agents during a period when, because of limited resources, the agency is auditing many fewer corporate returns than it did only a decade ago,” according to a nonpartisan research group. As a result, corporations get a hefty break. “The percent of large companies audited fell from 44 percent in 2005 to 35 percent in 2006, and the average number of hours per audit fell from 978 to 941.” The amount of money the IRS recommends for collection from these corporations dropped from $30.1 billion in 2005 to $25.5 billion in 2006. Simultaneously, the IRS is much more likely to audit the middle class. “Audits of these middle-class taxpayers rose to nearly 436,000 last year, up from about 147,000 returns in 2000,” tripling audits of tax returns filed by people making $25,000 to $100,000. Furthermore, the Government Accountability Office reported major security vulnerabilities in the IRS, “threaten[ing] the confidentiality, integrity, and availability of IRS’s financial and tax processing systems.” In turn, taxpayer information remains more vulnerable to “scams.”
ENVIRONMENT — ADMINISTRATION CELEBRATES AS WARMING EMISSIONS INCREASE: Yesterday, Stephen L. Johnson, the head of the Environmental Protection Agency (EPA) heralded the fact that “the growth of greenhouse gases [rose] by less than 1 percent in 2005.” “The Bush Administration’s unparalleled financial, international and domestic commitment to reducing greenhouse gas emissions is delivering real results,” said Johnson. Environmentalists quickly criticized the Bush administration’s spin on the bad news. “Things have come to a pretty sad state of affairs when the EPA tries to spin increased greenhouse gas emissions as a victory,” said Frank O’Donnell, president of Clean Air Watch. Greenhouse gas emissions, which contribute to global warming, have been increasing an average of 1.2 percent a year since 1990, “and the smaller increase in 2005 may have had little to do with Bush’s climate policy.” Additionally, in negotiations over recently-released U.N. Intergovernmental Panel on Climate Change (IPCC) report, the United States and China “managed to eliminate language in one section that called for cuts in greenhouse gas emissions.” The original draft read: “However, adaptation alone is not expected to cope with all the projected effects of climate change, and especially not over the long run as most impacts increase in magnitude. Mitigation measures will therefore also be required.” But the second sentence did not appear in the final version of the IPCC Summary.
ETHICS — E-MAILS AND INTERVIEWS REVEAL GONZALES’ ACTIVE ROLE IN U.S. ATTORNEY FIRINGS: “New details emerging from Justice Department interviews and e-mails suggest that Attorney General Alberto Gonzales and perhaps President Bush were more active than they’ve acknowledged in the firings last year of eight U.S. attorneys,” McClatchy reports. On Sunday, D. Kyle Sampson, Gonzales’s former chief of staff, told congressional investigators that “Gonzales took part in discussions last fall about David C. Iglesias, who was removed as the United States attorney in New Mexico, as well as in a June 2006 meeting that addressed concerns about Carol C. Lam, the United States attorney ousted from her job in San Diego.” Sampson’s revelations contradict Gonzales’s previous claim in a March 26 interview with NBC News that he “had not been involved, was not involved in the deliberations over whether or not United States attorneys should resign.” Private testimony by Associate Attorney General William W. Mercer confirmed with “greater certainty” that Gonzales was at the June 2006 meeting about Carol Lam. E-mails recently discovered by ABC News also indicate that Gonzales participated in the decision-making process for the firing of Lam. In an e-mail dated June 1, 2006, Sampson wrote, “‘AG [Attorney General] has given additional thought to the San Diego situation and now believes that we should adopt a plan’ that would lead to her removal if she ‘balks’ at immigration reform.” In his testimony on Sunday, Sampson also revealed that “Gonzales remembered talking to Bush last October about concerns with then-U.S. Attorney David Iglesias of New Mexico.” Gonzales has maintained that he does not recall the conversation with Bush. The details about the Bush-Gonzales conversation coincide with the revelation that Sen. Pete Domenici (R-NM) had personally appealed to Gonzales for Iglesias to be fired and that he had personally spoken to Bush soon after Gonzales said he “would fire Iglesias only on orders from the President.” Gonzales will have to answer for these contradictions in his testimony before the Senate Judiciary Committee, which has been postponed to Thursday, in the wake of the tragedy at Virginia Tech.
Gun control advocates said the Virginia Tech shootings “pointed to the need for tougher laws, while supporters of gun rights generally kept their heads down.” The Brady Campaign said the incident underscored “how easy it is for an individual to get powerful weapons in our country.” The NRA deplored the tragedy but declined to comment “until all the facts are known.” The White House said, “The president believes that there is a right for people to bear arms, but that all laws must be followed.”
$2.3 billion: The amount in state taxes that Wal-Mart, now the largest company in the world, appears to have skipped out on using corporate tax shelters.
“The tax burden in the U.S. is shifting away from the rich, to the point where in a few years it could change from being progressive to effectively flat, a new study shows.”
“Over the past six months, American troops have died in Iraq at the highest rate since the war began. … From October 2006 through last month, 532 American soldiers were killed, the most during any six-month period of the war. April, with 58 service members killed through Monday, is on pace to be one of the deadliest months of the conflict for American forces.”
While Paul Wolfowitz was serving as Deputy Secretary of Defense, the Pentagon directed a military contractor to hire his World Bank girlfriend Shaha Ali Riza to spend a month in 2003 studying issues related to setting up a new government in Iraq. Former Undersecretary of Defense Dough Feith “said he had no recollection of any request by his office to have Ms. Riza hired.”
“President Bush has reneged on his promises to Katrina’s victims,” the New York Times editorial page writes. “Over a year and a half later, there are 64,000 people still sleeping in trailers in Louisiana and far too many communities without schools, hospitals and other basics. These are unacceptable failures.”
The arctic north is experiencing some of the worst impacts of global warming. “Inuit hunters are falling through thinning ice and dying. Dolphins are being spotted for the first time. There’s not enough snow to build igloos for shelter during hunts.”
“The national average price for gasoline in the U.S. rose for the 11th straight week, according to a government report released Monday.”
And finally: Fashion lessons for Congress from Xtina. “Next week, Members of Congress will be getting some fashion cues from pop star Christina Aguilera. Aguilera designed a scarf and tie that Lifetime TV and nonprofit partners including the National Center for Victims of Crime will distribute to every Member of Congress on Monday.” But Christina won’t be there to deliver them herself because she’s “on tour.”