Make the Rich Richer and the (Upper) Middle Class Poorer

By Brigitte L. Nacos
You do not have to be an expert on budgets and taxes to be up in arms about the administration’s budget proposal for the coming fiscal year: While insisting on hundreds of billions of dollars more for the catastrophic military deployment in Iraq (and a fraction of that for the neglected efforts in Afghanistan), the administration wants to cut billions of dollars out of Medicaid and Medicare. This is particularly unpalatable because the administration is determined to making the tax cuts for the very rich permanent—not only on the back of the poor and the aged but also at the expense of the middle and the upper-middle class that struggle increasingly to send their off-springs to college and save for their old age. The so-called Alternative Minimum Tax in particular has become a dirty trick to eliminate the tax reductions for the upper middle class and in fact tax ever more of their members  at higher rates every year. As the Washington Post’s Ruth Marcus points out in today’s column, “in an irony that only a tax geek could love, the AMT has been transformed from its original purpose, a means of assuring that the wealthiest pay at least some taxes, into a way of underwriting tax cuts for the wealthiest.

As the Table below that accompanied the Marcus column shows, it is the middle of the income level—presumable many families with children—that increasingly will get hit much harder than those with the by far highest incomes. Therefore, it is amazing that with few exceptions, the news media have not paid much attention to the shocking details of the proposed budget that may be indeed more complex than the latest infotainment headlines. But what are serious newspapers and news broadcasts for—if not for information that serves the public interest?

Perhaps there is a need to raise taxes in order to finally get a health care system of the ground that assures sound medical care for all Americans (and to strengthen a military stretched too thin by the so-called “war against terrorism). But if so, a repeal of the tax cut for the wealthiest strata and, in fact, higher Alternative Minimum Tax rates for them, should be the first step. But who has the courage to make such suggestions? John Edwards may have killed his changes for 2008, when he suggested a tax increase to finance universal health care.

With the next presidential election overshadowing everything in Washington and American politics, there is little hope of meaningful opposition to the fake “no new taxes” claims in the 2008 budget proposal.