Saturday, November 26, 2005
Interesting article in today's New York Times: Republicans Are Deeply Split Over How to Apportion New Tax Cuts, by Edmund L. Andrews:
Republicans of all stripes want to cut taxes, but rarely have they been in so much disarray about whose to cut.
If House Republicans and President Bush have their way, more than half of tax reductions over the next five years will go to the top 1% of households, those with average incomes of $1.1 million. House leaders are pushing a $63-billion tax-cutting package that would extend President Bush's tax cut on stock dividends, protect oil companies from a windfall profits tax and shield people caught using illegal tax shelters.
The Republican-controlled Senate, by contrast, has passed a bill that would cut taxes by $59 billion but ignore Mr. Bush's top priority, and that contains two other provisions that have provoked his wrath. The Senate bill omits an extension of Mr. Bush's tax cuts for stock dividends and capital gains, which are to expire at the end of 2008. Instead, almost half of the bill is devoted to shielding middle-income and upper-income families from the alternative minimum tax. The Senate bill has also proposed two revenue-raising measures that Mr. Bush has threatened to veto: a one-year, $5-billion tax on major oil companies and a provision that would make it easier to impose steep penalties on people caught using illegal tax shelters.
The impact of the two bills would be wildly different. According to calculations by the Tax Policy Center, a nonpartisan research group, about 51% of the tax cuts in the House bill would go to the top 1% of income earners. The Senate bill favors upper-income families, but not nearly as much: only about 12% of the benefits would go to the top 1% of earners.