Voodoo Economics Redux

by Molly Ivins

Numero Uno: Nothing about taxation is simple. Steve Forbes and his flat tax are only the latest in a long line of goofy tax-simplifiers from Upton Sinclair, with his Single Tax on real estate (not a bad idea, actually), through assorted anarchists, communists and the Heritage Foundation.

People in the Bible complained about tax collectors, people in the Middle Ages complained about tax collectors, and in Rome they farmed out tax-collection contracts to private firms, just like in Bexar County, Texas.

The progressive income tax is the single fairest form of taxation ever invented. Getting it passed took decades, humongous court fights and a constitutional amendment.

Numero Two-o: The single figure that you have probably heard most often about the Bush tax cut is that somewhere between 40 percent and 45 percent of the total cut goes to the richest 1 percent of Americans.

Despite the gobbling of Bush's tax team, the number is not mysterious or difficult to arrive at, nor is it widely disputed. That's people making more than $373,000 a year. The richest 10 percent get 60.3 percent of Bush's cut, leaving a whopping 37 percent for the other 90 percent of us.

This is not a "vulgar" argument about "class warfare." This is a matter of fairness and logic.

What do you want the society to look like? If you could see a graphic of wealth in this country, it would look roughly like a pyramid -- except fatter at the bottom, until you get near the very top, when it suddenly shoots into the air and rises higher than a skyscraper. Why would we want to make this deformation worse?

The wealth gap in this country is even more staggering than the skyrocketing income gap. According to a 1995 study by the Federal Reserve, the richest 1 percent of American households (at that time worth a measly $2.3 million) owned 35 percent of the total wealth.

By 1997, the richest 10 percent owned 73.2 percent of total wealth, leaving an impressive 25 percent for the other 90 percent of us. These people do not need our assistance. We do not need to transfer more of the tax burden from them to the rest of us.

Now the first thing you hear from the Bush spinners, who get quite indignant about this (as though someone were trying to mislead you), is, "But you're counting the abolition of the death tax in that!"

("Death tax" is what Republicans call the estate tax. It's one of their "cute" things, like saying "the Democrat Party.")

The reason, actually, that we include the abolition of the estate tax when figuring out the effects of the Bush tax package is because the estate tax IS included. I hope you got that. I know it's complicated.

If you do take out the estate tax, the richest 1 percent still get 31.3 percent of the tax cut. According to The Washington Post, "Even a conservative economist such as the Heritage Foundation's William Beach agrees with that."

We could debate, I suppose, whether the estate tax is a death tax. It is paid, actually, by those who inherit money; once you're dead, they can't make you fill out any more IRS forms as long you stay dead (though they may be waiting for you after the rapture -- I haven't checked the theology on that).

When Bush says, "It's an across-the-board tax cut," most people think that means everyone's going to get about the same cut, like, across-the-board. They certainly do not envision "an across-the-board tax cut" being 44.3 percent for the richest 1 percent of the people.

The Republican argument is that rich folks pay more of the total taxes. According to the U.S. Treasury, the richest 1 percent pay about 20 percent of all federal taxes including income, payroll and estate, and there's no way you can make this case.

This whole deal is the tax equivalent of Bill Clinton's pardon of Marc Rich.