Democrats & Liberals Archives

Middle-Class Tax Cuts

Tonight’s debate is all about domestic policy. Sure, it’s mostly dry as dirt, but of all the issues, domestic policy has the most direct, non-violent impact on our lives. Here’s something that’s going to come up: President Bush just signed a bill extending the child tax credit, the 10% bracket expansion, and “marriage penalty” relief.

It’s important to note that the bill had wide bipartisan support and passed almost unanimously. These are the tax cuts that Al Gore was going to give us. The irony is, under Gore’s plan, these tax cuts would have been even bigger. Oh well.

Another important thing to remember is that these middle-class tax cuts - widely acknowledged as having the most impact on stimulating the economy - make up less than 25% of President Bush's total tax-cuts-for-the-rich package. In other words, three quarters of the tax-cuts-for-the-rich program could be tossed, and middle- and lower-class Americans would not notice the difference and the economy would be the same.

Kerry's tax plan rolls back the "for-the-rich" portion of Bush's tax-cuts-for-the-rich plan and strengthens these middle-class tax cuts. But wait... There's more: Kerry's plan also adds the following middle class tax cuts,

  • College Opportunity Tax Credit. A tax credit on up to $4,000 of tuition.
  • Childcare Tax Credit. A tax credit of up to $1,000 to help families pay childcare expenses.
  • Health care tax credits. $177 billion of tax credits to make health care more affordable, including a tax credit of up to 50 percent for small business health insurance premiums.

The money to pay for these middle-class tax cuts comes from letting lapse the Bush give-aways targeted at the top 2%.

I've heard some people say that letting those tax-cuts-for-the-rich lapse would hurt entrepreneurs. I am an entrepreneur and I know many entrepreneurs. Almost none of them make more than $200,000/yr. Most of our profits are reinvested in the company at the expense of "executive" salaries. As CEO of a software company, I paid myself about $40,000/yr so I could reinvest my profits into my business.

And to say that cutting stock dividend taxes and inheritance taxes - the so called "death tax" which really only affects about 4,000 Americans - hurts entrepreneurs is just plain silly.

The best thing the government could do for the small businesses that employ the majority of Americans would be to balance the federal budget, thereby strengthening the economy and increasing consumer and investor confidence, and then take the burden of health care coverage off businesses by making it affordable for individuals. Both of those strategies are major parts of Kerry's platform. Wall Street LOVES Kerry.

Posted by American Pundit at October 13, 2004 8:03 AM