The Fear of Taxes

William Du Bois, Ph.D.
©2003

People today are scared to death someone will raise their taxes. As it is, most people can only afford to shop at Wal-Mart. They certainly can't afford a tax increase.

Lately, liberals haven't been able sell the idea that investment in a good society pay dividends to us all. No one thinks about how much money they'd save with national health insurance or if government helped more with college tuition. Few think about what it would be like if they didn't have to dip into their savings to support aging parents in nursing homes. We forget about the hidden costs of not investing in preventing crime or pollution. And most don't imagine how increased support for small business loans and job training might transform their lives. "Tax and spend. Tax and spend," chant the conservatives.

Oddly at the same time, conservatives have gotten people to believe borrowing money on the national debt to give huge tax cuts to the rich will stimulate the economy. It's easy to understand why the rich would favor such a theory. For them, it's no gamble. They get their money up front. But why would the rest of us go along? It's been almost 25 years and we're still waiting for it to pay off.

The rich now pay less than half the taxes they paid in 1980.

That's right, their taxes have been cut by more than 50%. When you

calculate after tax income for the rich in constant dollars, you'll find their incomes didn't just double, they increased more than 2 1/2 times in less than twenty years. Most of that increase came from tax payers borrowing money on the national debt to finance them huge tax cuts.

Under President Reagan, 1/3 of every tax dollar went to pay interest on the national debt. In other words, without that debt, we could have lowered everyone's taxes by 33% and not had to cut any services. By 2000, the average American was working (100) hours more a year than they had been when the giveaway to the rich began in 1981. Since the 1980's, many middle class families have had to put another family member to work just to stay afloat. Still between 1979 and 1997, household income for middle class families has only increased 10% or by $3,400. That's compared to the top 1% who's after tax income has increased 157% when adjusted for inflation -- a whopping $414,000 extra a year. And keep in mind, that's mostly due to tax breaks. And that's all before George W. Bush put into effect his tax cut which was largest tax cut in the history of civilization. It overwhelmingly favored those in the top 1%. To put that in perspective, those are people who already had incomes in excess of $1 million a year.

The great tax fraud in history is going on right before our eyes. Politicians stand up straight faced and say it right out loud: "Middle Class Tax Cuts." It's all a high stakes con game. With so much money at stake, they throw all sorts of statistics at you to create that illusion. The spin doctors work full time trying to find fancy statistics to mask what's really going on. In truth, most of the money goes to the rich. The real agenda is pretty simple: Tax cuts for the rich. Lies for everyone else. But unless you know the tricks, it's hard to spot the con. Until you can see through the smoke and mirrors of their statistics, you're easy prey to their lies. This book will show you how.

Most of it is driven by fear. Take for instance the move to abolished the inheritance tax. In truth the law which was repealed allowed people to leave $1 million to your heirs tax free. Only the dollars over $1 million were taxed. Special interest groups ran ads on television telling of people having to sell their family farms because of the inheritance tax. When confronted, no one could name even one case in which that had ever happened. But people are afraid. And the advertisers play on that fear. Meanwhile the wealthy who finance the ads pocket the difference. While the greedy were running this scam, few noticed the big picture.

Even with the inheritance tax, inherited wealth still remained the primary way to get rich in America. By abolishing it, the gap between opportunities for the rich and poor became even wider. Money has to come from somewhere. We are going to have to raise taxes on the rest of us to make up the lost revenues(or we

could just add the bill to the national debt and postpone the consequences -- with interest).

Some rich people say, "it's just not right to tax inheritance." But we might phrase the question another way: Should old people have to totally deplete their life savings in nursing homes the last few years of their lives and have no inheritance left to leave their kids so people with estates worth over $1 million can pay absolutely no inheritance tax? It's a simple choice. But most of the advertising and media dollars are on the side of the very rich. And that's the message you hear.

In 198 [3?] Congress quietly raised the age to begin receiving full social security benefits from 65 to 66 and then to 67. There is a logic to raising the age. People today live longer than when social security was first invented. There was never any national debate over where people should get to enjoy that extra year of life or spend it working so we could afford a tax break for the rich. The top tax bracket for the richest decreased half of what it had been from 1930 to 1980. There was never any talk about putting some of that money back so the age for social security could stay the same. Most of the public didn't learn about the plan to raise the age until it was a done deal. When politicians say they will protect social security, most are lying. And notice how the media didn't protect us by making it a major story.

When Bush took office, the economy was booming and country was on course to pay off the national debt in 10 years and then there would even be a surplus. In a bizarre bit of logic, he wanted to refund the excess money we'd have in 10 years to the tax payers now. If you've trying to pay off own credit card, you might have noticed that strategy isn't apt to work very well.

Afraid they'd lose at the polls if they opposed tax cuts, the

tag along Democrats had purposed an alternative plan that only spent half of the projected surplus. As it turned out, the surplus never happened. The first Bush tax cuts threw the nation into deficit spending several months before September 11. There was soon no longer any extra money to pay down the debt. In less than two years, we had moved from the largest annual surpluses in history to the largest total national debt in history. A January 2003 study commissioned by the Bush administration concluded that to balance the budget would require raising everyone's taxes by 66%. The study was repressed and he ordered up another round of tax cuts for the rich. It was the third largest tax cut in history. We were told it would stimulate the economy.

Bush borrowed money on the national debt to give middle class people $300 rebates. "It's your money," he told us. No, it's not our money. Borrowing in our names to give voters rebates only put us farther in debt. And tax payers would have to pay that money back with interest. But it was a good public relations gimmick.

Taxpayers even got to foot the bill for mailing out notices saying

Bush wanted you to have some of your money back.