Samuel Hayim Brody
Bush the Exception, p.4

Johnston's most basic point is that most working-class and middle-class people receive their income from wages, whereas most rich people receive it in assets (the top 1 percent of Americans own almost half the stocks, bonds, and other assets in the country; the top 15 percent of Americans control nearly all of it). The government has nice, clear records of wages, and as a result poor and middle-class people can almost never evade or wiggle their way out of taxes. The rich, on the other hand, can hire tax lawyers who navigate the complexities of the tax code to figure out intricate ways of moving asset-money around from place to place in order to avoid paying taxes on it. When this happens, the poor and middle-class pay for it either with reductions in services or a proportionally greater tax burden. As a result, says Johnston, the figures often cited by Republicans about how the rich are unfairly taxed are not even close to the truth. As Johnston points out, we are already in the grip of something close to a flat tax-in terms of share of income paid as taxes, the top fifth of Americans pay 19 percent to all levels of government, while the lowest fifth pays 18 percent.

George W. Bush enters this story as a figure who exploits Americans' misunderstanding of taxes to exacerbate these systemic problems, possibly beyond repair. According to Johnston, as with O'Neill, the Bush tax cuts are the height of fiscal irresponsibility, a blind allegiance either to a certain kind of economic ideology or else to simple political calculation. What is really surprising in Johnston's account, though, is that even those people who make between $50,000 and $500,000 a year, who think the Bush tax cut is targeted at them, won't receive as much out of it as they think, and might even lose out. Thanks to a little-known tax on the books called the alternative minimum tax (or AMT, but most often referred to as the "stealth tax"), most Americans will have to pay more and more taxes over the next few years without even knowing it; their money will go straight into financing the part of the tax cuts that go to the super-rich. Originally designed to limit improper tax deductions, the stealth tax "operates alongside the regular income tax, but in what Congress described in 1986 as a 'parallel universe' with its own tax rates and its own stingy rules on what is deductible . . . most returns are prepared using computer programs, the software silently calculating the stealth tax in the background. The software calculates income and deductions under both the regular system and the alternative system and the taxpayer owes whichever is higher." This was all news to me, but even bigger news is that "Between 2003 and 2012 the Bush tax cuts will force an increase of $560 billion in taxes" to be paid under this tax. This means that not only are Bush's tax cuts irresponsible-they're actually not even going to materialize for millions of Americans, the money instead being essentially transferred to those rich enough not to pay the tax, or not to worry about it. The Bush administration has barely commented on the issue: assistant secretary for tax policy Mark Weinberger told Johnston that "President Bush was elected on a promise to cut taxes, not to reform the alternative minimum tax." What sells to the polity, goes. What is completely unknown, goes unaddressed.

Of course, in the private sector, Bush and Cheney regularly defrauded the government, taking advantage of tax shelters and other loopholes. According to Perfectly Legal, when Bush was a director of Harken Energy, a Texas oil drilling company, it created in 1989 an offshore subsidiary that would have allowed it to escape American taxes. During the five years that Vice President Dick Cheney was chief executive of Halliburton, the Dallas oil services and engineering company, it created at least twenty subsidiaries in the Cayman Islands. Hard to do that if you're working at Dunkin' Donuts and having the IRS take your taxes out of your paycheck.

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Image: Mica Scalin

March 2004

Passion and Violence
Jay Michaelson

A Song of Ascents:
The News from San Francisco
Sarah Lefton

Bush the Exception
Samuel Hayim Brody

The Wrong Half
Margaret Mackenzie Schwartz

God Had a Controlling Interest
Hal Sirowitz

Eliezer Sobel

Josh hosts a party
Josh Ring

Our 450 Back Pages

David Stromberg

Zeek in Print
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From previous issues:

The Red-Green Alliance
Dave Hyde

Elephant Memory
Jay Michaelson

Finding a Place in the Minefield:
American Jews and the Situation

Samuel Hayim Brody