WSJ ignored disproportionate benefits for wealthy in GOP tax package
SUMMARY: Wall Street Journal articles on the $70 billion GOP tax bill ignored entirely the disproportionate benefit to the wealthy of the GOP package.
In a May 10 article on the $70 billion tax bill agreed to by Republican members of Congress and passed by the House, Wall Street Journal staff writer Brody Mullins ignored entirely what critics note is the disproportionate benefit to the wealthy of the GOP package.
On May 9, Republican negotiators from the House and Senate finalized a tax package that would extend by two years President Bush's reduced tax rate for dividends and capital-gains income. The bill would also block the growth of the alternative minimum tax, which an increasing number of Americans have had to pay in recent years. The House passed the bill 244-185 the following day, with two Republicans crossing party lines to vote against the bill and 15 Democrats voting for it.
Critics of the bill have pointed to a recent estimate released by the Tax Policy Center showing that the dividend and capital-gains tax cut would significantly reduce taxes for those with annual incomes over $1 million, while offering meager savings to middle-class Americans. From a May 5 New York Times article:
The tax cut bill that Senate and House leaders have generally agreed upon is expected to save Americans at the center of the income distribution an average of $20 each, according to estimates by the Tax Policy Center, a nonprofit research organization in Washington.
The top tenth of 1 percent, whose average income is $5.3 million, would save an average of $82,415. Those in the top group would see their tax bill cut 4.8 percent, while Americans at the center of the income distribution -- the middle fifth of taxpayers, who will earn an average of $36,000 this year -- could expect a 0.4 percent reduction in their tax bill, or about $20.
Those who make less than $75,000 -- which includes about 75 percent of all taxpayers -- would save, at most, $110 each. Those making more than $1 million would save, on average, almost $42,000.
In his May 10 Journal article (subscription required), Mullins repeated Republicans' claim that the reduced tax rates on investment have propelled the economy in recent years:
The centerpiece of the legislation, which was a year in the making, would extend the 15% tax rates on capital gains and dividends from the end of 2008 through 2010. Republicans say the lower rates, first enacted in 2003, are a key engine of investment and economic growth.
But Mullins omitted estimates of the bill's disproportionate benefits to the richest Americans. Moreover, while he noted Republicans' argument in support of the tax cuts for investors, he failed to report any criticism of the bill.
By contrast, the May 10 article by Washington Post staff writers Jonathan Weisman and Paul Blustein noted the Tax Policy Center's estimate and bipartisan criticism of the bill:
But the package remains controversial, with GOP leaders saying it is essential to sustain a strong economic recovery and Democrats and a few Republicans saying the cuts would mainly benefit the wealthy and add to the long-term deficit.
[...]
Critics maintain that those tax cuts have overwhelmingly benefited the wealthy, while budget cuts target programs for the poor to close a deficit created largely by tax cuts totaling nearly $2 trillion since Bush took office.
Middle-income households would receive an average tax cut of $20 from the agreement, according to the joint Urban Institute-Brookings Institution Tax Policy Center, while 0.02 percent of households with incomes over $1 million would receive average tax cuts of $42,000.
Similarly, a May 10 article by New York Times reporter Edmund L. Andrews reported on concerns surrounding the uneven distribution of the tax cuts:
Opponents of the tax cut for investors, which reduced the rate on dividends and capital gains to 15 percent, said the new tax bill would overwhelmingly benefit the very wealthiest taxpayers.
The Tax Policy Center, a joint venture of the Brookings Institution and the Urban Institute, recently estimated that the top 10 percent of income-earners would get 81.8 percent of the benefit from lower taxes on investment profits and 73 percent of the benefit from freezing the alternative minimum tax.
As Media Matters for America noted, Mullins contributed to a September 29, 2005, article that substantially underestimated the cost of the dividend and capital-gains tax cuts; furthermore, the article contradicted prior reporting by Mullins.
I agree with MMFA here. The critics perspective should be mentioned in the article as should the projected benefits on a dollar basis for the wealthy vs middle class.
Finally, you show some common sense, Bruce. Congrats! What I want to know is if this pattern of irresponsible behavior is severe enough for YOU and other Republicans to step up and vote Democratic this November. And so what if 15 Dems crossed over to vote for this bill (15 DINOs I'd wager). If the Dems held party lines, it still would have passed overwhelmingly. A large Democratic majority would marginalize the "tax break and spend" Republicans and DINOs, the very brand of fools whose plans entail bankrupting the country in order to ostensibly save it.
With help like that who needs Armageddon?
I think it will come down to more Republicans staying home than actually voting for the Democrats. Either way your party should do rather well I would think.
This being a WSJ article and not an editorial as the other thread was, I think there is obviously a higher standard to present a balanced picture.
let see......I save $20....they save $82,000..... one question: why would any democrat vote for that? I know, i know...they are in that 1%.
$20 to $82,000...that's republicans standing up for the middle class!
Where was that figure mentioned in the material??
see 5th paragraph, first sentence.
Just wondering how long before someone chimes in with the ol "they make more money so their breaks should be bigger!" argument.
I'd like to see the difference between AGI vs. total wealth per tax bracket. It used to be pretty easy to do, but the IRS site has been modified to the point that I can't figure out how to do it anymore. Anyone know of any table out there showing that data?
(Letter sent to "Diane Rehm" show)
Your show tends to implicitly focus on the corporatist/free market perspective when discussing economic issues, ignoring or dismissing any other viewpoints without adequate exploration. For instance, your guests on yesterday's (05/10/06) forum regarding tax policy all uncritically accepted as fact the statements that 1) America has a higher standard-of-living than is found in Western Europe, and that 2) our economy is currently "doing well".
Both of these premises are eminently disputable, but these disputes are not often aired on your show or elsewhere in the media.
The questions should have been asked: How are standards-of-living measured? If the gauges used are infant mortality; availability/affordability of health care; and time-off-work to be with one's family; then the US is way behind most other industrialized countries in the world.
As for our economy "doing well", where was the recognition that real wages are down significantly and continue to fall? In short, where on your show is the perspective that - while the centralized economy of exploitation may be booming - the local economies of workers and average citizens are in a downward spiral.
Please look more frequently beyond your normal stable of commentators and try to provide a greater range of opinion, and a greater depth of critical analysis regarding the premises introduced on your show. Thank you.
The usual fundamentalist line is: witholding tax relief for industries and wealthy investors will halt investment and cause companies to withdraw from production, and society will have to do without certain goods, services, and revenues.
This preposterous but ubiquitous assertion flies in the face of one of the basic tenets of capitalist economics: if there is a demand that is not being met; there will be entry into the industry.
The crybaby corporations at the top of the heap should have their bluff called: if paying their fair cut to society is too much for them, let them take their balls home with them. If the demand they service is legitimate - and not just a creation of hyper-marketing and governmental favoritism - then start-up suppliers will pop up to fill the void in nothing flat.
The Country Club Republicans have carefully crafted their bogus argument over the past two decades. According to them, if you tax the earnings on investments, millionaires will stuff their money in a mattress rather than invest it and the economy will grind to a halt. Bull Sh*t! This is a bogus, dishonest argument which flies in the face of simple logic. Unfortunately, enough Religious-Right-Trailer-Park Troglodytes believe it and turn out in droves to vote against their own economic self interest. It's really a clever scam the GOP has going.
Even with the distinct possibility of losing the House (even the senate) in November... these guys just can't stop themselves. They deserve what they get. Hopefully, more indictments will follow too. Sickening.
If a government benefit is slated to expire, wouldn't you call a failure to extend that benefit a cut? Likewise would you call an extension a new giveaway to the beneficiaries? Of course not.
So why abandon this common sense notion when discussing tax rates? Not liking today's tax policy shouldn't make it impossible to see it objectively. Continuation of 2005 tax rates ("extend by two years", "block the increase") is not a tax cut. That's common sense, and that's how taxpayers will see it.
I concede that budget rules violate common sense, and that tax law twisted according to those rules also violates common sense. Nevertheless, voters still operate in a common sense world where a higher tax rate than last year equals an increase, a lower rate than last year equals a cut, and the same rate as last year equals no change.
Both parties are trying to ensure that the other party gets the blame for the huge tax increases (from today's rates) that are inevitable as baby boomers retire. Calling a continuation of tax rates an increase is one of the strategies Democrats use, but it violates common sense and is therefore ineffective. (Republican strategy is simply to delay tax increases until Democrats take control of the government. I don't think that will work to deflect blame either.)
You can make some solid arguments that Republicans have made the problem worse than if they had done nothing, and those arguments would have the advantage of making sense to voters. But this article is not such an argument. It is an insult to the intelligence of the reader. The article make the indefensible assumption that fantasy tax increases built into prior law were real, as in having any chance of actually happening. No tax expert ever believed this.
The 2010 Roth conversions in the tax bill are another example of future tax fantasy. They will never, ever happen. Anybody who plans to use that provision is a complete fool. (The Roth provision was a case of enacting one fantasy to fight another, but that's another story.)
First the taxcuts WERE for a specific period. They were figured as expiring. That means the tax rate was specifically sceduled to go back to what it was. Extending that IS cutting taxes as it stops the scheduled return to the old rate. Second Republicans when attacking democrats called NOT voting for tax cuts, voting for tax increases. Why should the left be held to a MUCH higher standard than the right? I think the first example makes it technically correct and the second point makes it clear why its kosher
that tax receipts from corporations are up about 30% over a year ago and only about 10% on individuals.
you hear that? "Unamed Sources", "Some People Say", Fox News, WSJ
Show your work Oscar.
This IS the Wall Street freaking Journal we're talking about here. WSJ isn't interested in the middle class or poor, only the rich. Never have been, never will be.