A Tax Cut for the Wealthy?

Presidential contender Richard Gephardt recently characterized the White House's economic-growth proposal as "knee-jerk tax cuts that do nothing but pay off George Bush's wealthy campaign contributors while killing economic growth."

This has a familiar ring. Two years ago, Senate Minority Leader Thomas Daschle attracted considerable media attention when he stood alongside a brand new Lexus and alleged that the "rich" would spend their windfalls on expensive cars while the rest of us would be stuck with a muffler.

Liberal pundits and their allies on Capitol Hill say these types of things all the time. According to them, the best way to create jobs is to expand government programs such as the Medicaid health program for the poor, extend federal payments to those without jobs, and spend billions to bail out wasteful state governments that are running deficits.

Unfortunately, advocates for the sort of tax relief most likely to create millions of new jobs come up short in this latest episode of "class warfare."

For starters, who exactly are all these "wealthy campaign contributors" who would be luxuriating in the windfall from Bush-style tax relief? Are we looking at images of the idle rich who spend their days sipping Bordeaux next to their Italian tile-adorned pools?

Nope. When liberals assail "the rich" they unwittingly set themselves against millions of hard-charging entrepreneurs who manage modest, family-owned firms, and workaholic two-parent families comprised of schoolteachers and middle managers who struggle to make ends meet.

Earning just $71,800 annually puts you among the wealthiest 20 percent of all Americans. According to some liberals, this means you're rich. Yet married couples who file joint returns make up 85 percent of this group.

These are the families who pay more taxes simply because they're married. The proposals now before Congress to eliminate the so-called "marriage penalty" would bestow immediate tax relief on these "rich" couples. These families also stand to benefit immediately from the proposed reduction in tax rates, from 27 to 25 percent.

But hold on, you're saying. Surely "rich" Americans include the "truly wealthy," those in the top income-tax bracket who earn more than $300,000 per year. Surely they can afford to forgo a tax cut?

Well, two out of three taxpayers in the highest tax bracket (500,000 out of 750,000) are actually small businesses — the mom-and-pop firms who comprise the engine of job growth in this country — and would realize 80 percent of the $13 billion in tax relief due to this change.

They are the proprietors of the fabled family-owned farms that so many of our liberal friends, wearing another hat and drawing from a different prepared speech, extol when they seek federal subsidies on their behalf.

They run the neighborhood restaurants, bicycle stores, and flower shops you patronize. They work 60-plus hours a week and employ quite a few aspiring millionaires who hope to own something some day. They are the everyday heroes whose hard work and sacrifice should be rewarded and encouraged, not penalized by excessive taxes and lambasted by opportunistic presidential candidates eager to score cheap political points.

Recently, the owner of a small business in Paducah, Ky., told Commerce Secretary Donald Evans that he already had calculated the savings he would realize from an immediate drop in the top tax rate from 38 to 35 percent. Should the cut materialize, he said, he would plough the savings back into his company to buy new equipment and hire 30 additional employees.

Not buy a Lexus. Not install gold fixtures in his master bathroom. Purchase new equipment. And employ another 30 Americans.

There are thousands of small businesses just like this one, all across the country, ready to hire — provided Congress removes some of the unnecessary impediments. In fact, research from my colleagues at the Heritage Foundation shows the legislation under review in the House of Representatives would allow these job-generators to create more than 1.2 million new jobs this year and next.

Should we shrug off a chance to spark real economic growth like that, just so tax-cut critics can score political points deriding the "rich"? Considering that the people they're talking about are likely to be you or someone you know — individuals who might aspire to buy, say, Lexuses of their own someday — the answer should be obvious.

— Michael Franc is vice president for government relations at the Heritage Foundation, a Washington-based public-policy research institute.

Well, I bought a Lexus in January...guess I'm a villain. But Democrats would have us believe that small businesses really create jobs by taking out government loans, not as a result of reduced taxes. They want to collect the money first, and then hand it back in the form of loans and subsidies, just to be sure the small businesses "spend it right".

Leave it to Tommy Daschle to insult muffler shops!

The last go-around I purchased a muffler for my old pickup. Not only was I happy, but so was the muffler shop and innumerable town residents.

Didn't see a lot of new Lexus cars appear. But I'm sure they'll need mufflers someday!

"In general the art of government consists in
taking as much money as possible from one class of citizens to give to
the other." --Voltaire

"The American Republic will endure, until politicians realize they can bribe the people with their own money." -- Alexis de Tocqueville

And of course, the classic:

"It is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise revenues in the long run is to cut rates now. The experience of a number of European countries has borne this out. This country's own experience with tax reduction has borne this out. The reason is that only full employment can balance the budget and tax reduction can pave the way to full employment. The purpose of cutting taxes is not to incur a budget deficit, but to achieve
the more prosperous, expanding economy which will bring a budget surplus." --John F. Kennedy, December 1962

Nice article, thanks.

It just pisses me off that they keep on spewing this crap - and there has not been, to my knowledge, a concerted effort by anyone to put it to rest. Yes, a few have tried - Rush had the tax tables on his web site some time ago, a few Pubbies mention and debunk it from time to time. I just wish we could spear it and put it to rest for good.

What about fathead Mikey Moore - I'm sure he is in the upper tax bracket. The same for any and all DemoRat Senate snakes and House reptiles.

Like the article says, the more $$ a business has to operate with the more they will attempt to grow that business. What don't the dimwits not understand about this?

The Pubbies need to, perhaps, start 'splaining this to Joe / Jane Public in an understandable way - all the time.

Meanwhile, I'll think of something to put on the back window of my SUV's.

/rant off

LVM

Earning just $71,800 annually puts you among the wealthiest 20 percent of all Americans. According to some liberals, this means you're rich.

There was a time when this favorite Democrat mantra (tax cut for the rich) only referred to our entrepreneurs, investors, and employers, now these socialists want to include our factory workers, acountants, middle and upper managers.

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