The Truth About Bush's New Tax Cut

Here, in one nugget, is what you need to know about President Bush's plan to scrap taxes on dividends:

Almost half of the projected benefits from President Bush's plan to scrap taxes on dividends would go to the 1 percent of the population whose incomes top $1 million. The scheme has been promoted as beneficial to the elderly, but in fact, only 6 percent of the elderly with incomes under $50,000 get anything out of it. These figures come from a briefing Monday by the Center for Budget and Policy Priorities, a Washington think tank. Further, taxpayers who earn $35,000 or less come away with $27 more a year.

The impact on individuals is just the start of the matter. State governments are already reeling under fiscal pressures. Instead of following the right-wing mantra of helping the states out, Bush's proposal would drain more money away from them, worsening their situation by at least $4 billion a year.

Are right-wing Republicans playing class war? Don Nickles, the self-made businessman and senator from Oklahoma, had this to say on Sunday's Meet the Press, and he wasn't kidding: "Well, the wealthy are paying most of the taxes. You ought to have tax cuts for taxpayers."

At a time when we are supposedly trying to get rid of subsidies to farmers and other groups, Bush is offering a direct subsidy to Wall Street. The argument is that eliminating the tax would spur the market. Original predictions showed stocks would rise 20 percent. By Monday these projections had sunk to 6 to 8 percent. And critics were beginning to point out that the president's plan would hurt other sectors of the economy, leading to a probable decline in the housing sector and the sucking of money away from small business.

Nor will it better the lot of the working class or the poor, or help the long-term unemployed. And it's unlikely to salve the wounds of the millions whose 401(k)s tanked with the market last year, save to possibly lure them back into the securities game, which is basically unchanged since the big accounting scandals.

As for the federal budget, which just two years ago was showing rosy surpluses, the picture now is one of growing deficits. "Even if no further tax cuts or spending increases are enacted, almost three-fifths of the improvement made from 1986 to 2001 will have been reversed in 2002 and 2003," says the Center for Budget and Policy Priorities.

Meanwhile, as the Republicans ready yet another giveaway to the rich, Bush plans to cut back on domestic spending by holding the budget to $316 billion, according to The Washington Post. The savings, we're supposed to believe, are necessary to pay for homeland security and defense spending, but Victor Miller, a senior fellow at Federal Funds Information for States, isn't buying.

"They're saying we can't have guns and butter," Miller told The Washington Post, "but in fact the butter side is the tax cut."

James Ridgeway is a staff writer for the Village Voice.