"The American people are paying the highest taxes during peacetime in history," Republican House Majority Leader Dick Armey declared last week, arguing for Bush's tax cut plan. Many Republicans have parroted the line, but none has explained it.
If Armey had bothered to characterize his claim, he would have said that taxes as a share of Gross Domestic Product (GDP) were the highest they've been during peacetime since World War II. And if he'd suddenly been overcome with honesty and forthrightness, Armey further would have explained why his statistic is utterly misleading: The statistic on which it is based doesn't count capital gains, which accrue mainly to the rich, and have soared from about $100 billion to about $600 billion annually during the recent economic boom. Factor that into GDP, as one should, and Armey's nifty sound bite goes bust. Armey also fails to mention that only taxes on the rich have gone up, while taxes for the middle class have remained the same or dropped.
Armey's vague claim and selective disclosure is well in keeping with the other arguments Republicans employ to support Bush's tax cut. Common among them is a desire to hide the politically unpalatable fact that the rich will benefit inordinately.
Take Bush's response to a widely cited report by Citizens for Tax Justice, which found that more than 40 percent of his tax cut would go to the richest 1 percent of taxpayers. Bush says he is helping the poor by cutting taxes more at the bottom than at the top -- but he is talking only about income taxes and not about payroll taxes (payroll taxes are the biggest burden on the poor). In other words, Bush is using selective accounting to claim that he's helping the poor, while at the same time purposely ignoring the fact that his tax cuts overwhelmingly benefit the rich.
Bush responded to the Citizens for Tax Justice analysis with one of his own, which found that only 22 percent of the cut would benefit the wealthiest 1 percent (still a staggering chunk). But Bush purposely left out of this estimate the effects of the estate tax -- he calls it the "death tax" -- which applies only to estates worth more than $675,000 -- i.e., primarily the rich. He also limited the analysis to the first few years of his plan, leaving out the later years when the big benefits for the wealthy kick in with a vengeance.
Bush's Treasury Department used similarly shady tactics when it, too, issued numbers to refute the claim that Bush's tax cut primarily benefits the rich. The Treasury report indicated that those making less than $30,000 would receive a 136-percent reduction in income taxes. Again, the report ignored payroll taxes and the estate tax. But the Treasury also rigged the report by measuring income in a way that put the Bush plan in the best possible light. As The Washington Post noted, the Treasury Department usually divides income into five equally spaced categories, the so-called quintiles. Bush's Treasury switched the measurement to three unequal categories. It also pointedly chose not to measure the benefits that accrue to the top 1 percent, as it does traditionally. Measured the traditional way, the Post found that about 60 percent of the benefits would go to the top 20 percent of earners, while the bottom 40 percent would wind up with only 9 percent.
Each of these examples seeks to paint Bush's tax cut plan as one that primarily benefits working families -- which is exactly what it doesn't do. But this tactic should be familiar. In the recent past, Bush co-opted Democratic issues like prescription drugs, education, and Medicare and Social Security reform by obfuscating the difference between his plan and a favorable Democratic counterpart. This time, as before, it all boils down to fuzzy math.
