The Tax Man Cometh

Get ready.

And, yo buddy, he jus gettin' started.

With nearly $1.8 trillion in tax cuts rammed through in just three years, the Bush Administration is now addressing the more fundamental business of restructuring the tax code itself. That means not just chopping existing taxes – mainly on the affluent – but shifting the whole focus of the federal government's revenue-raising activities.

This year, the Administration is finally pressing forward in the direction [ex-Treasury Secretary Paul] O'Neill had favored, with a series of initiatives that would eliminate much if not most taxation of savings and investment, and instead aim the tax collector's net squarely at workers' wages....And the Bush White House tends to get its way on Capitol Hill.

...Taken together, these changes will allow affluent Americans to shelter hundreds of billions of dollars a year from taxation, effectively rolling back much of the progressive structure that was implemented beginning with the income tax ninety-one years ago.

Bush's tax overhaul agenda also threatens to blow an even wider hole in the federal budget. The HSAs could skim $6.4 billion off the income tax uptake over ten years, according to the Joint Committee on Taxation....LSAs could drain away $200 billion to $300 billion in revenues over ten years, or an estimated 0.3 percent of what is expected to be the Gross Domestic Product in 2013. RSAs would suck out another $50 billion, or 0.5 percent of GDP, by 2028.

...Bush's proposed three-pack of new savings accounts would have none of the contribution limits and other rules that currently keep tax-exempt savings from benefiting only the rich.

...Democratic leaders in Congress are already flagging some major problems with the savings accounts, especially the fact that savers would pay taxes on their contributions when they make them, rather than later on, when they start to withdraw assets. That could provide a temporary boost to revenues over the next five years, helping Bush to claim he fulfilled his State of the Union pledge to halve the deficit in that period, but draining revenues in later decades.

...Payroll taxes siphoned into millions of individual Social Security accounts could suck up another $1 trillion over ten years. The problem for low-income workers is what they will do if their personal accounts do not make up for the retirement income they will lose if basic Social Security benefits are cut – which most of the proposals now being circulated would do in some form.

...With more and more capital income – from savings and investments – shielded from taxation, that leaves generally less affluent workers to shoulder most if not the entire burden of paying for government out of their wages. "One of the goals long-term is to have the lowest taxation on capital income as possible," explains Eric Engen, a resident scholar at the American Enterprise Institute – "not just another tax decrease across the board."  article

Let them eat cake.

And get those new prisons up and running.

....but hey, do what you want....you will anyway.