In fact nearly 40 percent of the stock held by those households is in IRA or 401(k) accounts, which are “not subject to taxation, and thus would not receive a tax benefit from the reduction in the tax rates on dividends and capital gains,” write Joel Friedman and Katharine Richards of the Center on Budget and Policy Priorities. The taxable gains enjoyed by most of the rest are comparatively minuscule. Indeed, the share of income from capital held by the bottom 80 percent of the population has fallen from 23.5 percent in 1989 to 12.6 percent in 2003.
Okay, some Republican politicians argue, but the tax cuts increased the value of all stock, including stock held in IRAs and 401(k)s. Not according to a Federal Reserve study, which found that the tax cuts did not raise the value of stocks. So who gained from the cuts? The top 10 percent of households, who own 70 percent of all taxable stocks, and especially the top 1 percent, who own 29 percent. It gets worse: 54 percent of all income from capital gains and dividends goes to the top 0.2 percent, a group only slightly larger than the 30,000 who leave taxable estates. These folks—the ruling class—derive a third of their income from capital gains. They are taxed on that income at a lower rate then most of us pay on our wages. And we must also pay payroll taxes. They pay no payroll tax on their capital gains.
The Republicans intend making all the Bush tax cuts—in income, capital gains, and estates—permanent in this session of Congress. The cuts have already cost the Treasury $1 trillion. Made permanent, over the next ten years they will cost an additional $2.8 trillion. If not offset by equivalent cuts in spending, the interest on the cuts adds another $492 billion; the cost of making Bush’s cuts permanent thus comes to $3.3 trillion. The cost of the tax cuts already enacted, with interest on the borrowing that paid for them, adds another $3.3 trillion, bringing the total cost of the Bush tax cuts to the Treasury through 2016 to $6.5 trillion.
How much is that? The Center on Budget and Policy Priorities calculates that it is three times the cost of all federal funding for education, three times the cost of all spending on veterans, and thirty times the budget for the Environmental Protection Agency. The total sum of the cuts granted to those earning over $1 million a year alone amounts to nearly what the “federal government spends at all levels on education.” Over the next seventy-five years, the Bush tax cuts will cost about 2 percent of gross domestic product; by contrast, the Social Security shortfall, billed as a calamity by Bush, is 0.7 percent of GDP. A Brookings study found that deficits of the magnitude created by the cuts plus normal spending, far from stimulating growth, will shrink the size of the economy.
And then, of course, there’s the estimated $2 trillion cost of the Iraq War….
George W. Bush is a catastrophic president. And he will be in office for 900 more days.