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Friday, May 23, 2003

Devilish details

The official outline of the Bush tax cut that's becoming final today was released yesterday by the congressional Joint Committee on Taxation. You can find it over here. (Thanks for the link to my colleague Jon Forman at the University of Oklahoma law school.)

This document won't tell you the cost of the various provisions of the new law, and so on its face it doesn't show the massiveness of the tax giveaway that's coming to people who own stocks and real estate in their own names. But it is interesting to note that Congress threw a few bones to the little guys. Tax rates are cut slightly across the board, and the 10 percent bracket for very low levels of income has been widened. (Of course, both rich and poor enjoy those reductions.) The child credit has been increased by $400 as well, but not for upper-middle to high-income taxpayers, who don't get that credit at all.

There are also several provisions that lessen the "marriage penalty" -- the extra tax that a two-wage earner couple pays under current law for being married, rather than living together as single. But what the rhetorical statements don't mention is that the new law also increases the "marriage bonus" -- the tax savings that a one-wage-earner couple enjoys by being married rather than living together as single. Although from a selfish standpoint I like the latter development, as a tax theoretician I must say that it takes an existing distortion and makes it worse. With this Congress, distortions are o.k., so long as the beneficiaries are traditional Leave it to Beaver married couples.

On the whole, of course, we can't afford any of this. Most middle-class folks had better take the meager tax cuts they get and invest them wisely. Their kids are going to need all that and more when it's time to pay the piper for the drunken Bush tax cut party.

Bush's transparency cracks me up. He's sitting there with a scrapbook of Poppy's career, and running the country based on it. What was the most popular thing George Sr. ever did? Beat up on Saddam Hussein. What cost George Sr. his job? Signing a tax increase.

Here we are more than a decade later, and Junior has decided to redo the Saddam-whacking, and undo the taxing. Screw the consequences, he's going to get himself re-elected.

And sadly, given the sorry state of the Democratic Party, he is.

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