July 07, 2006

TAXING SUBJECTS



Caption: If they were people, these baby peacocks would inherit a growing share of debt.

It looks like younger Americans, including those yet to be born, are or will be living, pretty much literally, on borrowed time.

According to Citizens for Tax Justice, the tax cut policies of the Bush administration have dramatically increased the burden of national debt.

Average Americans wind up as net losers as their share of national debt typically is much larger than any gains they may have realized from tax cuts.

It's kind of like the old good news/bad news jokes. The middle 20% of American families received around $1,855 in tax cuts from 2001 to 2006. That's the "good" news. The bad news is that these policies added $8,936 in national debt for each family member, a net loss of $7,081.

The only winners in the scenario, and this may be a pyrrhic victory, are the wealthiest one percent of Americans. This group, with average incomes of over $1 million, gained $84+ K per person from the tax cuts. The per person share of increased debt for this group is $54K+, which means a net gain of over $30K per person.

The average West Virginian from a middle income family gained less from the tax cuts ($1,569) but saw per person national debt share rise by $8,412, a net loss of $6,843. The wealthiest one percent of Mountain State families were the only ones to come out ahead here as well, but by a smaller margin. Gains from tax cuts averaged $4,257 when subtracted from the increased share of national debt.

While ideologues of oligarchy have made a lot of noise protesting the so called death tax on people who inherit large sums of wealth, they have in effect imposed a birth tax on millions of Americans.

As Diane Lim Rogers of the Brookings Institution wrote in the San Francisco Chronicle,

The "birth tax" is a true cost imposed on all American babies. It cannot be repealed, no matter how upset Americans eventually get about it. Through the harmful effects of deficits on national saving, these future adults will be less likely to have the means to pay off these debts and are in danger of facing a lower standard of living than adult Americans today.


The problem is short term thinking. Even the wealthiest Americans aren't likely to come out ahead in the long run.

GOAT ROPE ADVISORY LEVEL: ELEVATED

1 comment:

Albert Saur said...

Birth Tax! I wish I'd thought of that!