Bush’s proposed tax cut does not only benefit rich, as many believe
COMMENTARY

Many people would lead you to believe that the current tax cut and economic stimulus package proposed by the Bush administration is one that caters to the wealthy.

I have read opinions on this page citing evidence that the richest 1 percent of taxpayers will receive an average tax break of more than $24,000 and that middle income taxpayers will receive a mere $265.

But we should look at just who the wealthy are to spur consumer spending. Implementing the president’s across-the-board tax cut package means that upper-income earners will be saving about 4 percent of their income in tax savings. Likewise, Americans for Tax Reform, a conservative think tank, reports that the average family of four with two earners making $39,000 a year, just like my family, would receive a tax break of $1,100 — or 3 percent of their income in tax savings.

Sixty percent of those upper-income earners are small business owners. These tax savings for the wealthy create more opportunity for them to invest in their own businesses, creating a higher demand for labor, which in turn creates more jobs. This leaves us with more Americans with jobs who if the president’s across-the-board tax cut is in place, will be paying a smaller percentage of their income in taxes and have more disposable income to spend as consumers and help spur the growth of this sluggish economy.

More disposable income equates to more opportunity to spend and save. Bush’s proposal of erasing the dividend tax combined with the higher opportunity to save more will allow the 9.8 million seniors to save an average of $900.

The bottom line is that this tax cut isn’t just for the wealthy. This tax cut is for everyone and actually means that the upper income taxpayers will be paying a higher percentage of the tax revenues.

The Wall Street Journal reported in 2000 that the IRS found the top 50 percent of income tax payers paid 96 percent of the tax revenues for that year. Furthermore, due to more exemptions, deductions and credits proposed in the Bush tax cut, fewer and fewer people will actually be paying taxes in the lowest tax bracket — 3.8 million — meaning that the top 50 percent of tax payers will now be paying more than 96 percent of income tax revenues, thus creating a more progressive tax system — that doesn’t sound like Bush is catering to the wealthy to me.

This tax cut equates to Americans keeping more of their hard-earned money in their own pockets instead of sending it to wasteful government programs. Milton Friedman, a Nobel laureate in economics, said “[he has] never seen a tax cut that [he] didn’t like,” and I concur wholeheartedly.

I also recognize the responsibility a government has when talking about cutting revenues. That means cutting spending too, and I hate deficits as much as any Democrat. The Treasury Department says that under the Bush plan, tax payers who earn less than $30,000 a year will see a 17 percent reduction in income taxes, those earning $30,000 to $40,000 a year will see a 20.1 percent reduction and those earning more than $200,000 will see an 11.2 percent reduction.

But suddenly, I realize, President Bush’s tax cut doesn’t seem to lean as heavily toward the wealthy as some might lead you to believe.

Shawn Franklin is a senior economics and marketing major from Stanton.
He can be reached at (s.r.franklin@tcu.edu).