The Great Wealth Transfer
Paul Krugman does a really nice job of explaining why the current Adminstration’s policies are more Dooh Nibor (reverse Robin Hood) economics, but I think we need to have a couple of addendums. Let’s start here:
And while Bush’s tax cuts shaved only a few hundred dollars off the tax bills of most Americans, they saved the richest one percent more than $44,000 on average. In fact, once all of Bush’s tax cuts take effect, it is estimated that those with incomes of more than $200,000 a year – the richest five percent of the population – will pocket almost half of the money. Those who make less than $75,000 a year – eighty percent of America – will receive barely a quarter of the cuts. In the Bush era, economic inequality is on the rise.
What tax cut? Bush’s fiscal policies are only deferring taxes as his fiscal reign has increased government spending, not reduced it. So in the future, someone will have to pay more in taxes not less. But who? George W. Bush tells us no one but we know that’s not true. We have seen some conservatives, such as Greg Mankiw and Bruce Bartlett, admitting this fiscal reality. Bruce wants a consumption tax, while Greg wants to tax gasoline. Shifting away from taxing capital income towards taxing consumption in general or gasoline in particular also represents a wealth transfer.
But we have another candidate for the “Great Wealth Transfer” if the Bush game plan is to so screw up the General Fund financing that we have to raid our future Social Security benefits. We hear lots of conservative insisting that the Federal government can’t afford to pay those benefits in the future. Well – that may be true if we refuse to tax rich people. But then we have converted payroll contributions into employment taxes. And this could be the greatest theft in history. When George W. Bush says he’s given you your money back, the “you” are folks like Jeff Skilling but it’s not his money but the money of workers who were told they were putting payroll contributions into the Social Security Trust Fund.