Bush’s New Budget Plan:
Stimulating the Wealth of the Capitalist Class

Jan 20, 2003

Bush says that his latest tax cut proposals, which will cost 674 billion dollars over ten years, have something for everybody. He claims the "average" person will have their taxes reduced by $1,083. But we all know what "average" means: those at the top will get much more than everyone else.

For example, over half of the cuts will come from just one proposal–cutting the tax on stock dividends. Those who own most of the stock of companies, and therefore collect most of the stock dividends, are the very wealthy. The richest ten% of the taxpayers own 91% of all stock held outside of retirement accounts, the stock that would benefit from Bush’s cuts. They will be the ones who will receive almost the entire benefit.

Bush justifies this gift, claiming that dividends are taxed twice, since corporations have already paid income taxes on their profits before they dole out these profits to their shareholders in the form of dividends.

Of course, this argument is nothing but a smoke screen. Many corporations pay no income taxes at all. According to the Institute of Taxation and Economic Policy, which examined the books of 250 large companies between 1996 and 1998, one out of every six large companies paid "less than zero" in federal corporate taxes, despite the fact that these companies reported profits of 26 billion dollars. Not only did these companies avoid paying any corporate income tax on their profits, they actually received rebate checks from the federal government totaling three billion dollars. This list includes companies such as General Motors, ChevronTexaco, Goodyear and CSX.

For the Bush administration, this presented no problem. After all, the incoming Treasury secretary, John Snow, was the chief executive of CSX, a big railroad company, which paid no federal corporate income taxes on its 930 million dollars in reported profits over four years, and actually received tax refunds totaling 164 million dollars.

Of course Bush says that companies that don’t pay taxes won’t get this tax break–but the proposal is so complicated that it’s sure to be as filled with tax loopholes as is the current law that lets profit-making companies pay no taxes.

Finally–Bush calls this a "stimulus plan"–aimed at stimulating the economy. No–Bush’s "economic stimulus" plan is aimed only at "stimulating" the incomes of the very rich.