Do you remember when the DEMOCRATS in the Senate voted for a $350 billion tax cut? At the time I wrote, “The country has massive deficits, we are at war, programs that help the public are being slashed – and Democrats vote for another tax cut!”
But this was portrayed as a “victory” – the Democrats blocking an even bigger tax cut. Some “victory,” huh?
Well guess what? The Senate today passed a mix of gimmicks designed to get around this $350 billion limit. For one thing, they eliminate taxes on dividends, but only until 2007. This trick keeps the bill within the already-agreed-to $350 limit, which means that it cannot be filibustered. So even though only three Democrats voted for this today, their previous “victory” means they can do nothing to block this sham that will further bankrupt the country. (Actually, the bill lowers taxes on the rich by $420 billion, but makes up for it by increasing taxes on middle-class workers, for example, increasing taxes on Americans working overseas.)
Meanwhile, Bush started today working to get all these limiting gimmicks made permanent. The Democrats, with their “victory,” fell RIGHT into this trap. They should have had the integrity to simply vote against ANY tax cut at a time of massive deficits. I wonder if they ever heard the expression, “too clever by half?”
Update – It’s much worse than it looks!
Vowing to tax income only once, Bush had said dividends should be tax-free only if they were paid out of fully taxed corporate profits. But for the sake of simplicity, the Senate bill breaks from that principle. Investors who own shares in corporations that pay little or no federal taxes would pay no taxes at the corporate or individual level.
“This kind of gives the lie to the argument that what this is all about is eliminating the double taxation of dividends,” said Robert Greenstein, executive director of the liberal Center on Budget and Policy Priorities.
Got that? You own a million shares in a company that moves to a mailbox in Bermuda to avoid paying ANY U.S. taxes. They company sends you a dividend and you never pay taxes on that either. The money is NEVER taxed. How long will it take for all the rich fucks to buy a zillion shares of these companies, or move their companies to Bermuda, and never again pay ANY taxes. This is a HUGE incentive to pull all money out of any company that pays any U.S. taxes, or to get your company to stop paying U.S. taxes. AND it is a huge incentive to pull your money out of any investment of any kind that does not pay dividends, and out of any company that reinvests profits in things like research, employee benefits, pensions, etc. The ONLY thing that matters now will be dividends. NO taxes at all!
Update – Certain companies that have been sitting on huge, huge hoards of cash can issue dividends now, and get it out of the way before 2007. I think this could save Gates about $8 billion in taxes.