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The Fog of Taxes



The preoccupation with war in the last month has shifted attention away from domestic issues, but in the last few days, with the occupation of Iraq entering a new phase, the pendulum has begun to swing back. And as critical as the situation remains in the Middle East, it is important that our attention swing as well.

The fog of war has lifted, giving way to the fog of taxes.

If you’re having a sense of déjà vu, you’re not alone. The current President Bush, determined not to avoid his father’s mistakes, has decided to spend the political capital a successful war always brings a president by pushing his tax plan through Congress. The centerpiece of the original $726 billion cut is a cut in taxes on dividends.

The request has since been reduced to $550 billion by the House and to $350 billion by the Senate. Many are wondering whether it will be the president who ends up paying a political tax on his war windfall.

The tax cuts have been widely panned as a give-away to the rich—and for good reason. The greatest reductions in rates would go to people making over half a million a year, while some people making less than $20,000 a year would actually see their rates rise, according to an analysis by the Urban-Brookings Tax Policy Center.

The cuts would also gut state budgets, whose tax codes are tied the federal tax code. In the case of Utah, the price tag would be $30 million annually, according to the Center on Budget and Policy Priorities.

Furthermore, two recent polls indicate Americans have little stomach for the president’s fiscal program.

A poll released this week by the Associated Press revealed that 61 percent of Americans oppose the president’s tax package. Most remarkably, a majority of people who already think taxes are too high, and a majority of Republicans—56 percent in both cases—think that, with the economy struggling and a war to pay for, now is not the time for new tax cuts.

Even more revealing were the results of a NPR/Kaiser Family poll, conducted by Harvard’s Kennedy School of Government and issued the day after the AP poll.

Although 51 percent of the respondents described themselves as moderates or conservatives (only 16 percent called themselves liberal), 66 percent said that having the government provide needed services was more important than cutting taxes. A majority, 53 percent, said keeping the federal deficit down was more important than lowering taxes. And a whopping 80 percent said that maintaining domestic spending was also more important than lowering taxes.

Finally, despite high post-war approval ratings, the poll revealed that half of the public doesn’t believe the president when he tells them they will benefit from a tax cut.

Bush has chosen to swim against a strong domestic tide for the sake of helping the wealthiest Americans with a lopsided tax package that will do little to create jobs or pull average Americans out of the economic doldrums.

Bush’s move leaves the impression that it has little to do with economics and a lot to do with ideology. But the White House may be misjudging the public mood, which is to help Main Street, not Wall Street. By taking advantage of this moment to put the country deeper in hock for the benefit of the wealthiest taxpayers, he may end up repeating his father’s mistakes after all.