Tax Relief is Un-American, Wealthy Say

CBS Market Watch • 10/25/01

By Thomas Kostigen, CBS.MarketWatch.com

LOS ANGELES (CBS.MW) -- The same group of rich folks who banded together to lobby against the repeal of estate tax has reunited to tell the government: "We don't want tax relief."

A $100 billion stimulus bill that would provide permanent - and in some cases retroactive - tax cuts for corporations and wealthy individuals is being proposed by the Bush administration and was passed Wednesday by the House of Representative in the form of bill H.R 3090. The Senate will now take up the measure. See full story.

"This is an extremist form of serving special interest groups," says Betsy Leondar-Wright, a spokeswoman for United For A Fair Economy, the Boston-based group that claims members in the top 5 percent of the U.S. income bracket.

"The U.S. has really urgent needs right now. And all these new and urgent needs are virtually ignored in [the bill's] single-minded focus in giveaways to corporations and wealthy individuals."

The group points to the fact that 14 public corporations such as IBM and General Motors would get $6.3 billion in rebates of their alternative minimum tax (AMT) payments back to 1986.

Total AMT rebates would cost $25 billion, more than the total value of rebates the bill gives to the 39 percent of American households who didn't full rebates this summer, United For A Fair Economy notes.

To be sure, the group isn't alone in its criticism of the stimulus bill. In an opinion editorial, economist Paul Krugman says the bill "looks as if it was written by corporate lobbyists."

Still, political observers say the bill cleared the House relatively unchanged.

"It sounds like it's going to pass as written," Leondar-Wright says.
Indeed, White House spokesman Ari Fleischer says the President is pleased with the bill as it stands. And with the highest popularity rating of any seated president, it may be difficult to buck the administration at this time of national crisis.

But still.

"This is not rallying around the President, it's running around the President," Leondar-Wright says.

The Democrat-controlled Senate will likely make changes in the tax package.
Some of the more provocative provisions in the bill include a $12.8 billion speed-up of income tax rate reductions to the best-off 30 percent of taxpayers.

United For A Fair Economy says 100 million antibiotic treatments for anthrax infection and better baggage screening machines at every U.S. airport would cost less.

As well, the bill's $40.2 billion tax cut for accelerated depreciation to which corporations can take advantage, is more than quadrupling the Centers for Disease Control budget, extending unemployment benefits for three million people for 13 weeks, federalizing airport security with no ticket price increases, and modernizing Amtrak.

"The priorities of this stimulus package are upside-down."
Richard Perl,Pacific Partners International Investments   
 
"I'm embarrassed and offended," says Richard Perl, a self-described "well-off" individual who is president of Pacific Partners International Investments in New York City and supports United For A Fair Economy's cause.

"With so many in my city grieving, digging through rubble, and losing their jobs, my government should be asking me to pitch in, not handing me a bonus. The priorities of this stimulus package are upside-down. It is not just ineffective, it's unpatriotic."

Dal LaMagna, chief executive officer of Tweezerman Corp. in Glen Cove, N.Y., adds, "We've had nine interest rate cuts this year and still nobody's investing.

Why should manufacturers like my company react any differently to tax incentives? What drives businesses to expand is demand for our products, so what we need is a tax and spending package that puts money into the hands of people most likely to spend it."

The oft referred to "most likely to spend" constituency are plain and simple workers.

Not only is the average worker facing the greater likelihood of a layoff - the unemployment rate may rise next year to 6 percent from 4.8 percent, according to Conference Board research - he or she won't likely directly benefit from the current stimulus package.

The bill is meant to "accelerate" tax rate reductions and increase allowable deduction and depreciation expenses for corporations, with unused AMT credits refunded.

That's the trickle down theory all over again. But this time it looks like the average American is going to get soaked.

Copyright 2001, CBS MarketWatch.