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What "$300 Tax Break?"

by Molly Ivins

As usual, those who need it most will get the least
Damn, now we do have a bad situation, and it's mostly because the media have consistently misreported the tax-rebate story.

Word has now filtered through lower-income communities that "everyone is going to get $300 back from the government."

"It's $500 for single moms," a single mother told me, proud to have all the details, "and $600 for married people." Unfortunately, 39 percent of the people in this country will not get the full rebate -- 26 percent (34 million taxpayers) will get nothing at all, and another 13 percent, 17 million, will get only partial rebates.

As usual, those who need it most will get the least -- mostly those with incomes under $25,000. Furthermore, bloodsuckers are out there offering "loans against your tax rebate" at the ever-reasonable 300 percent interest rate. These are loans against money that in most cases will never come. That so many people are looking forward to tax rebates they desperately need but won't get, leads to disappointment, if not heartbreak, and to anger.

Television journalists have taken to referring to the "$300 tax break" without even the cautionary "up to $300 for those who pay above a certain rate." Thus does poor reporting lead to disappointment and bitterness. The working poor, who get the Earned Income Tax Credit, are under the impression that they pay income taxes (they do) and thus qualify for the rebate (they don't). Even those too poor to pay income tax believe the payroll taxes withheld from their paychecks mean they, too, pay federal taxes (they do, and it's often a significant percentage of their incomes).

What this means is the folks who would rush out and spend their tax rebates because "the baby's home and needs shoes," thus stimulating the economy, won't be getting a rebate.

Meanwhile, at the $300 end of the deal, many Democrats are planning to give their checks to causes that have been hurt by Bush policies. Because this idea seems to have sprung up simultaneously in several places and spread like wildfire on the Internet, it's impossible to give attribution for it.

A number of organized groups are pooling their rebates to make such gifts. So far, the leading contenders seem to the Children's Defense Fund (as is only appropriate, since Bush swiped their slogan "Leave no child behind" without ever giving them credit) and various environmental groups.

Meanwhile, Republicans who get the full $300 don't urgently need it either and are likely to save it, thus stimulating the economy even less. This was not what the policy-makers intended (although it's hard to tell, since the Bushies made diametrically opposite claims about the reasons for this tax cut). Neo-Keynesians clearly need to rethink the effects of tax cuts in a society where the economic gap is this big.

Only a tax accountant could love the charts, but if you want to see where you or a lower-income friend ranks on this thing, Citizens for Tax Justice has excellent information, including state-by-state rates on its website. They report, "Oddly, although most taxpayers in the bottom 60 percent of the income scale will get reduced or zero rebates, the tax bill extends the benefit of the rebate to about 2 million upper-income payers who will not actually benefit from the new 10 percent rate bracket, due to the Alternative Minimum Tax."

Meanwhile, the adventures of our old compadre Karl Rove get stranger and stranger. The Associated Press broke the story of Rove, who at the time owned between $100,000 to $250,000 worth of Intel stock, meeting with the company's chief executive and two lobbyists in March, while Intel pushed for federal approval of a corporate merger. The merger was approved two months later. White House officials said Rove played no part in approving the merger. Rove sold his entire stock portfolio on June 7, AP reports, for between $1 million and $2.5 million, after they had recovered most of their value from a 20 percent drop earlier in the year. Sen. Tom Daschle has announced the Senate probably will not be investigating Rove.

Rove next appears in the decision to end bombing on the Puerto Rican Island of Vieques in 2003. This decision made no one happy, since the Navy needs the bombing range and the Puerto Ricans don't see why they should get bombed for another two years. As to why the president's top political adviser sat in on meetings on what to do about a Navy bombing range -- I don't know, maybe he owned stock in it.

Speaking of matters ethical, also worthy of an investigation is Enron chairman Kenneth Lay's apparent attempt to threaten the head of the Federal Energy Regulatory Commission. The chairman of FERC says he got a call from Lay, who is probably Bush's largest single contributor, saying that if wanted to keep his job as chairman, he should adopt certain viewpoints.

Now if this were the Clinton administration, and the Rove and Lay incidents had occurred, the Republicans would by now have five congressional committees and two special prosecutors investigating. While I find the current slumberous indifference more restful, I did hear a Democrat say the other day, "You know, Ken Starr could be really useful."

Meanwhile, the special prosecutor in the Henry Cisneros case (HUD secretary '93 to '97, accused of private misconduct long since settled) labors on like Inspector Javert.

© Creators Syndicate

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Albion Monitor June 19, 2001 (

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