Thursday, May 11, 2006

Who will pay the piper for tax breaks?

That new tax breaks for the wealthy will be passed on Capitol Hill is a given. They have already cleared Congress and the Senate is poised to quickly follow. It's not surprising given that most of our legislators are in the top ten percent of income earners. These breaks will undeniably benefit them. Equally certain is that the average American will be paying the tab. The NYT examines how the latest Congressional Ponzi scheme involving Roth IRAs will play out.
Current law doesn't let well-off Americans switch to Roths because it assumes — correctly — that they don't need extra help from the government to build their savings. Changing that rule will be a great deal for them. Income tax is due up front on the amounts that are shifted into Roth accounts, giving lawmakers a temporary burst of revenue to mask the true cost of their continuing tax-cutting spree.

But over time, Roths are a big revenue loser, because there's no tax on the earnings that accumulate in a Roth, even when the money is withdrawn. Because Roths are set up to avoid taxes in the future, they are especially attractive to people who believe that tax rates will go up over time.
It's a belief well grounded in reality. The house of cards that underpins Bushenomics will eventually collapse. One assumes the White House is hoping it won't happen before they leave office so they can blame the next administration, but this rule change will protect the assets of the big campaign donors among the have-mores when tax increases inevitably become necessary in order to pay for this reckless deficit spending. Once again the ever shrinking pool of middle class Americans will be footing the bill.

As a companion editorial in the NYT points out, it's difficult to believe the tanking GOP think this wholesale sellout of middle American's financial security will be a winning strategy.
After five years of duplicitous fiscal policy, Americans are catching on. And Republicans who see tax cuts as an automatic vote-getter may be in for a rude shock. Some two-thirds of Americans now say that the president's priorities, which clearly include ever more tax cuts, do not reflect their own.

This administration has been extraordinarily successful in painting their irresponsible policies as being constructive and reasonable. On paper it looks good, but all the pie charts and power point presentations in the world can't disguise the simple fact that for middle class Americans, there's no money in the bank and our quality of life has vastly diminished under GOP leadership.
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10 Comments:

Blogger susan swann said...

Why is it that no one is paying attention to the fact that the Bush administration has bankrupted the country in under six years? People really don't care, but its their children and grandchildren who will be left in the lurch. Our country is now run by and for the uber-wealthy, i.e., Bechtel, Halliburton, pharmaceutical companies, and the American taxpayer is carrying the burden on their back. I don't know whether to laugh or cry but I am pissed!

7:22:00 PM  
Anonymous Anonymous said...

Why is it that no one is paying attention to the fact that the Bush administration has bankrupted the country in under six years? People really don't care, but its their children and grandchildren who will be left in the lurch. Our country is now run by and for the uber-wealthy, i.e., Bechtel, Halliburton, pharmaceutical companies, and the American taxpayer is carrying the burden on their back. I don't know whether to laugh or cry but I am pissed! I say vote out every single incumbent - Democrat or Republican.

7:26:00 PM  
Anonymous Libby said...

I'm pissed too and I'm ready to sweep at least most of the incumbents out. We might consider rewarding good behavior in a few to inspire the new group to pay attention to us instead their consultants.

8:09:00 PM  
Anonymous Anonymous said...

The Bush administration is the Enron of government: depleting the coffers for the favored, getting out when the getting is good, thereby leaving the the enormous debt to the ordinary citizens and their descendents to paying off the debt for many decades into the future.

9:33:00 PM  
Blogger Left of Center said...

On the positive side the death of this empire won't be a long painfull process. I keep hearing this little voice in my head that says, "move off the grid, get solar panels on the house, buy a gun, plant a big garden."

10:33:00 PM  
Anonymous Libby said...

Sounds like a good plan LOC.

10:48:00 PM  
Anonymous Reality Hammer said...

Aside from Republicans being happy about the tax cuts there isn't a single true statement in either Times editorial.

If the policies of President Bush have been so bad why are we in the fifth year of an economic expansion? Why are deficits declining? Why are tax revenues up? Gee, perhaps in another six years this "house of cards" will collapse. :P

Face it: the reality is that tax cuts have worked and there are no amount of lies the left can tell that will change that.

2:00:00 PM  
Anonymous Libby said...

Reality Hammer is an odd name for someone who is in denial about Bushenomics. The boom is on paper only RH, not in the pocketbooks of middle Americans and funding cuts by borrowing is a disaster waiting to happen. They just want to engineer it so it's blamed on the Democrats when taxes are evitably raised to pay for it. The short terms gains are just a card trick that belie the costs down the road.
Would you care to expose my "lies" by showing me the money?

3:57:00 PM  
Blogger Churchill said...

Rh says Bush has us in an economic boom. We pay 3 dollars a gallon for gas, lose our mfg jobs to foreign countries, and spend billions to protect the oil interests of Bush and Chaney. Where do you get econ boom?

12:06:00 AM  
Blogger Thomas Gagne said...

The comments here are similar to comments on Stone Soup Musings' Republicans fail american families again.

Libby, you asked for facts. The US treasury is reporting /record breaking tax receipts/ which are coincident with the tax breaks "for the rich."

The problem of an equally record-breaking deficit is congress and the president haven't slowed spending one iota. Spending is outstripping revenue. Again. We just don't seem able to find politicians of any stripe that can control spending. In that regard I'd like to knock them all upside the heads.

In the meantime we should all ne careful not to detest and destroy that which we want to become: rich. Very few people buy lottery tickets intending to git it all away. The rest of us plan on living it up--not on what we earned, but on what we won.

12:51:00 PM  

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