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Monday, April 25, 2005

Think you pay high taxes now? Wait till the Bush Administration gets through with you
Posted by Jill | 12:29 PM

Americans have long been bamboozled into thinking that Republicans are the party of less taxes. Perhaps if you are a major corporation, or if you obtain most of your income from investments, they are.

But if you're an ordinary working schmo like most of us, getting wages or salary, the Republicans are about to stick it to you so hard you won't be able to get out of bed in the morning...assuming you have a bed to get out of when they're done with you. Oh, what they come up with may be simpler, and doing your taxes won't be as confusing, but you'll be lucky to end up with a quarter in your pants pocket.

How much of your pay are you willing to sacrifice for "simplification"?

The President's Advisory Panel on Federal Tax Reform has decided that you have just too many tax deductions that you're allowed to take. This is based on information obtained by "witnesses" the panel called -- nonpartisan (sic) geniuses like Bush family consigliere James Baker and Fed Chairman Alan Greenspan, who decided after being silent for three rounds of Bush tax cuts for the wealthy, that the deficit must be dealt with -- by cutting programs.

The president whose current short-duration economic personal savior is Grover "Starve the Beast" Norquist has been delivered a message by this panel that "We have lost sight of the fact that the fundamental purpose of our tax system is to raise revenues to fund government." Yes, we have, folks...I recommend that we start asking corporations to pay THEIR fair share.

But that's not what the panel is talking about. What they're talking about are things like the tax deduction for businesses that provide health insurance to employees -- worth $126 billion next year; the mortgage interest deduction, the capital gains tax break for home sales, the deduction for charitable contributions and the child tax credit.

Do you honestly believe that your employer will provide health insurance if there's no tax incentive? I don't know about YOUR health plan (if you have one), but for me to pay the entire premium for my self+spouse health insurance would be over $10,000/year. Do you have a mortgage? Maybe you bought a home in the last year, perhaps with one of those new 40-year-mortgages that let you buy a house that ten years ago would have cost you under $200,000 but is now over $500,000? Maybe you pay, oh, say, $15,000/year in mortgage interest? That's a $3000-$4000 tax hike for you right there. And if you're a new retiree who wants to sell your house, you're going to get socked with capital gains taxes -- when those whose investments are primarily in stocks won't.

As for charities, remember when they were supposed to replace government for helping the poor? Are you going to continue to give when you can't deduct the donations?

That college savings plan for your kids that you're so proud of? That deduction would go too. Are you a teacher? Do you buy extra school supplies for your students? No more deduction for that either.

Meanwhile, a group of morons calling itself Americans for Fair Taxation advocates replacing the entire federal tax code with a 30% sales tax on everything. 30%. Think about that. "But I'm in the 25% tax bracket, and if I don't have to pay Social Security tax, that's a tax cut for me, right?"

WRONG.

If you're in the "25% tax bracket", you're probably paying closer to 15-20% in Federal income taxes. Here's why: If you're married filing jointly for 2004, you paid 10% tax on the amount of income AFTER DEDUCTIONS -- the deductions the Bush Administration wants to take away from you -- up to $14,300. You paid 15% on the amount up to $58,100. You ONLY paid 25% on the amount above $58,100.

Most people think they're paying 25% on everything, without taking into account the graduated tax tables and their deductions.

So even if you stop paying the 6.2% FICA (Social Security) tax and the 1.45% Medicare tax, you'll still be well under 30% for your total Federal tax rate. Let's not even take into account the employer's share of the FICA tax, because no, they're NOT going to give you that in your paycheck; it'll go right into the CEO's pocket.

Here's some implications of a 30% sales tax. The wealthy consume a lesser percentage of their total income, so their taxes would be reduced, whereas the poor or working-class family that lives paycheck to paycheck would be taxed at the full 30% rate.

There won't be any Social Security, so if you don't have anything left to save after paying 30% tax on your rent, food, and clothing yourself and your kids, you are going to be S.O.L. when you retire. And don't you DARE look to the government for help.

The value of your home will probably plummet too, because without a mortgage interest deduction, and with a 30% tax on the purchase of a home, most people will be priced out of the market at its current rates.

So just how much IS spending less time doing your taxes worth to you? Enough to be OK with carrying the entire tax burden for the Bushistas and their cronies?
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