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Lies, Damned Lies, and Taxes
Newt Gingrich is losing another round to Bill Clinton.
You'd think that holding the title "Most Hated Politician" would be enough (no small feat when the competition is Jesse Helms), but no; Newt's got to keep on fighting, lead that revolution, hopeless or not. This time, just like last time ("The Shutdown"), Bill didn't even break a sweat: he just left Newt out there, showing all four blind sides to the world. In his bouts with Bill, Newt has yet to score so much as an ear tip.
The Republican majority in Congress has spent the year arguing with itself about the shape of a tax cut. Finally, three weeks ago, the Republicans reached agreement and voted a package through. The day after passage, as though no vote had been taken, Mr. Clinton held a press conference to announced his plan for a tax cut. While he didn't want to mention "veto", well, Congress really should pass his plan.
There are predictable differences between the plans. For example, the Republicans would cut capital gains taxes from 28% to 20%; the President, from 28% to 27.7%. The exemption for estate taxes, now $600,000, would phase up to $1,000,000 in ten years under the Republican plan; not a dime under the President's.
In the weeks since Mr. Clinton's proposal, the Democrats have damned the Republican plan as a tax cut for the rich, and convincedÉ oh, only maybe 80% of the country that the damn Republicans are trying to cheat widows and orphans (again). Dick Gebhardt's attacks lead with a Treasury study saying 67.9% of the cuts under the Republican plan would go to the wealthiest 20% of taxpayers, and 19.3% to the top one per cent. Then he shouts: "The lion's share should go to hard-working middle-income families!"
The Democrats are hammering the most vulnerable Republican spot, and Mr. Gingrich is helpless to defend his party. No, he's worse than that. Every time he makes a pitch on Face the Nation, he looks like a typical orphan-cheater, and the Republicans lose another 10% of the American people. If he keeps it up, the Republicans are going to be in negative numbers.
The Republicans have a messenger problem so bad that shooting him is exactly the right thing to do. Somebody else should make the case for the Republican tax cuts: some honest, fair-minded person, a flat tax opponent, a Clinton voter, ideally no more than onceÉ.
So here goes.
No matter how unreasonable the Republican distribution of tax cuts may seem (damned unreasonable), any honest review of income taxes says the Republican plan is, in fact, as fair as fair can be. The Democrats' claim of inadequate taxes on "the rich" is one of the great political whoppers of this or any other era.
The Reagan tax reform in 1986 "flattened" the tax code to two brackets: 15% and 28%. However, it also removed almost all the old dodges, and 28% actually paid was a lot more money than 49% (the old top rate) avoided. Since the 1986 reform, more exemptions have been removed, and Mr. Clinton added steeper brackets in 1993, at 33% and 39.6%.
The source for the following figures is an IRS analysis of 1995 data, the most recent available ("Selected and Other Historical Data", page 139).
Percent of returns with incomes under $30,000: 53.1%. Percent of total tax dollars paid by this group: 10.6%. Per taxpayer: $1,271.
Percent of returns with incomes over $75,000: 10.7%. Their percent of total tax dollars: 57.4%. Per taxpayer: $33,963.
Percent of taxpayers with incomes over $200,000: 1.3%. Percent of total dollars paid by these 1,280,870 taxpayers: 30.1%. Per taxpayer: $146,019.
Two observations. If it's fair for the upper end to pay a bigger share when we raise taxes, it's fair for them to get a correspondingly bigger share of any tax cut. Second, we should occasionally give thanks to the energetic and productive million-two out there at the far end. Without them, we might have to pay our own way.
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