NY Times' Johnston Exposes GOP's Reverse Robin Hood-ism

David Cay Johnston is one of the best reporters working in America - this is a statement of the obvious. Today shows exactly why that is. In a fascinating report on the effects of President Bush's dividend and investment income tax cut of 2003, Johnston proves what most honest observers said would happen: namely, that the legislation would give away massive amounts of taxpayer cash to the wealthiest people in America, while giving almost nothing to everyone else.

You may recall, this tax cut was sold with particularly devious dishonesty, even for the Bush administration. The White House kept telling the country that "91 million taxpayers will receive, on average, a tax cut of $1,126" - a deliberately deceptive packaging, as the Center on Budget and Policy Priorities noted at the time.

Now, Johnston tels us what really happened:

"Among taxpayers with incomes greater than $10 million, the amount by which their investment tax bill was reduced averaged about $500,000 in 2003, and total tax savings, which included the two Bush tax cuts on compensation, nearly doubled, to slightly more than $1 million. These taxpayers, whose average income was $26 million, paid about the same share of their income in income taxes as those making $200,000 to $500,000 because of the lowered rates on investment income. Americans with annual incomes of $1 million or more, about one-tenth of 1 percent all taxpayers, reaped 43 percent of all the savings on investment taxes in 2003...Those making less than $50,000 saved an average of $10."

Faced with this data that shows the investment income tax cuts are being used as a powerful tool of class warfare, Republicans are salivating - publicly pushing to extend these tax cuts, and thus intensify their reverse Robin Hood class war even further. Johnston reports:

"During last week's debate on whether to restore limits on the alternative minimum tax or make permanent the cuts in investment income taxes, House leaders chose as their spokesman Representative David L. Camp, a Michigan Republican. He said Republicans favored continuing investment tax cuts because that would help more people and would especially benefit those making less than $100,000. 'Nearly 60 percent of the taxpayers with incomes less than $100,000 had income from capital gains and dividends,' he said on the House floor. But I.R.S. data show that among the 90 percent of all taxpayers who made less than $100,000, dividend tax reductions benefited just one in seven and capital gains reductions one in 20...[Camp's] office said he supported making the investment tax cuts permanent because cutting these rates was 'good policy and good for our economy.'"

This is really an outrage. As Rep. Charlie Rangel (D-NY) said, "These tax cuts are beyond irresponsible [when] we're in a war; we haven't fixed Social Security or Medicare; we've got record deficits." But that's really the new Republican ideology: it's not conservative and it's not principled. It's the same ideology of a bank robber in the Old West - steal as much as possible, with no regard for the fact that you are bankrupting the whole town.

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