The Oregon House of Representatives this week passed House Joint Memorial 28 supporting President Bush’s tax cut plan. The resolution claims that the President’s plan would “contribute to raising the standard of living for all Americans.” In fact, one of three Oregon families will get no benefit from the Bush plan.
Altogether, 146,000 Oregon families, with 33 percent of the state’s children, would get nothing from lower income-tax rates, changes in the estate tax or any other feature of the plan. According to the Census Bureau, 291,000 children live in these families. These families won’t even benefit from doubling the child tax credit to $1,000.
The Bush plan does not help 146,000 Oregon families because they do not earn enough to owe federal income taxes. However, they do pay other taxes: federal payroll taxes, federal and state taxes on gasoline, state income taxes, and property taxes, among others. About 76 percent of these low income families include a worker.
The Bush proposal primarily benefits the most economically comfortable. For instance, the plan extends the child credit to many families with incomes as high as $300,000. When all of the President’s tax proposals are taken together, 39 percent of the benefits will go to the wealthiest 1 percent of households, even though those households now pay just 24 percent of taxes.
There is a broader problem with Bush’s plan: it will cost so much that it will leave almost nothing for other priorities and will lead us back to an era of federal deficits if the economy does not perform as expected. Billed at $1.6 trillion, the Bush tax cut will actually cost closer to $2.6 trillion after the costs of additional interest payments on the nation’s debt, making the cut retroactive and other anticipated costs are included. The tax cut would swallow up virtually all of the projected available surpluses. There will be almost nothing for real improvements in education, lifting children out of poverty, truly helping seniors pay for prescription drugs, or making meaningful improvements in the financial status of Social Security and Medicare.
Congress can provide significant tax relief to the middle class and families working for modest wages if they scale back the President’s oversized tax proposals. For example, Congress could provide relief to taxable estates that include a family-owned farm or small business for a fraction of the cost of repealing the estate tax entirely.
President Bush has said his policies will ensure “no child is left behind.” To truly leave no child behind, we need a more balanced approach that does not place a tax cut primarily for the affluent ahead of all other national needs, including the needs of over a quarter of a million Oregon children.
Charles Sheketoff is the executive director of the Oregon Center for Public Policy.