The truth about Dean and taxes part 2

[dsc]

Since we have more tales from the Dean bashers on taxes it seems only fair that we have more truth about taxes.

I bumped my first thread up so that it can be looked at as well as this one.

It is my intent to discuss Dean's policy on taxes in four different areas in this thread. Federal payroll taxes, federal and state income taxes, state sales taxes, and state property taxes. All of these have been the objects of tales from Dean's bashers and need to have some of the light of truth shed upon them.

First federal payroll taxes. Dean has proposed eliminating the cap on them which is currently at $85,000. He wishes to use those funds to shore up social security for future generations (like ours). He has not, as two or three posters like to pretend, that he is going to institute a new payroll tax or raise the current one on income currently covered. This tax would overwhelmingly fall upon upper middle class and rich people. None of it would fall on anyone who could reasonably be called poor or lower middle class. It is the definition of a progressive tax.

"Governor Dean, about those high earners: The non-partisan Center On Budget And Policy Priorities has suggested using revenue from the estate tax as a progressive way to help bolster Social Security. Should wealthy Americans be contributing more to Social Security?

DEAN: What wealthy Americans should be doing is paying their fair share of the payroll tax. The Social Security cannot survive on its present track.

(APPLAUSE)

And the solution to that is simply to make wage earners above $85,000 subject to the payroll tax. And that will cure the Social Security ills if we can change presidents."


Here is the link:
www.washingtonpost.com/wp-dyn/articles/A22205-2003Aug6.html


Here are the relevant links for the rest of my post. None of the text below is their's but the facts and figures come from them. One exception to that is the summary of Bush's tax cut which is public record. I also derived the bracket figures.

www.state.vt.us/tax/majorvttaxes.htm
www.leg.state.vt.us/reports/tax/vol1-03.htm



Second, On federal income tax policy. Dean wishes to return to Clinton's tax policy. That would reinstate the estate tax which expires in 09 to return in 10 at the level it was in 00. That was 50%. That would restore the taxation of dividend income as regular income. That would restore the rates Clinton had (15, 27, and 39). That would eliminate the increase in the child deduction (expires in 05). He would use the money to fund health care and to balance the budget.

Of all of those cuts only two can sanely be thought of as helping the poor and middle class. The rate cut from 15 to 10 and the child deduction which expires anyway. Everything else is a give away to the wealthy. But most poor also get the EIC which means that they pay no income taxes and get no child deduction. That is why no poor people got checks this time and so few did the first time. Restoring this back to Clinton's rate would raise the taxes of a miniscule number of poor people and most of those are living off investment income so it is hard to figure how poor they really are.
The middle class benefited only slightly more. The problem with exempting them from the resoration of tax rates is two fold. They both have to do with honesty. One is that we can't afford both the tax cut and health care. If we want our budget to be balanced again and for our economy to boom again then we have to pay our bills. Two is that we can't do now what Clinton did in 92. He promised a tax cut and couldn't deliver. That is one of the largest reasons we lost Congress in 94. If we don't level with people now then we will at best get a temporary victory. Bailing out the states and fixing our economy is both the best way to prosperity and the best way to fairer taxes.

Now to state income taxes. Dean inherited a tax structure that was 28% of the federal taxes of any citizen of Vermont. Using Clinton's tax numbers that would be a three tiered system of 4.2%, 7.56%, and 9.9% of federal taxable income. He changed that to a five tier system of 3.6%, 7.2%, 8.5%, 9.0%, and 9.5% of federal taxable income. My link provides charts to show when each rate kicks in. That is actually a progressive tax cut. Poor people percent taxation was lowered by a greater amount than that of rich people. The rich got 0.4% while the poor got 0.6%. That is the reverse of what Bush did. The poor got 5% while the rich got 6%. I was wrong on one thing in previous threads. State taxes are still deductable. Also if Bush had not been elected Dean would have probably left taxes at 24% of the federal tax (where his 99 tax cut left them) that would be 3.6%, 6.48%, 9.36%. That would be a flat tax cut. This is not the Bush supply side economics that Dean haters pretend it is.

Third state sales taxes. Here Dean inherited a 5% rate. It was scheduled to fall to 4% but he kept the tax as is. He later exempted clothing under $100 from it. Now make no mistake about this. If one argues Dean cut income taxes buy not preventing them from falling then one can't also argue that Dean increased the sales tax by preventing them from falling. Both can't be true. You have to take your pick. The net effect of Dean was to make the 5% sales tax slightly more progressive.

Fourth state property taxes. Dean made two adjustments to state property taxes in his tenure. Both were part of act 60 which was intended to equalize funding in schools across Vermont. One was to levy a state property tax to fully fund the minimum grant to each student in Vermont schools. Thus the state is now paying the full bill of educating students to a minimum standard. The second thing was to create an exemption allowing people with incomes at or below 75k to pay 2% of income instead of that property tax. Combined these changes a) funded poor districts better. b) decreased property taxes in poor districts. c) increased them in rich ones. d) cut poor people's property taxes. That is the definion of progressive taxation.

Finally, the one and only point that the Dean bashers have in regards to progressive taxation and Dean, is on the excise taxes. He did increase taxes on alcohol, cigarettes, and gasoline. All of these taxes are used for dedicated purposes and are hardly unique to him. Kerry increased gas taxes in 93 when he voted for Clinton's economic plan for instance. I think the social value of these taxes outweigh their regressivity. Many liberals would agree. Many wouldn't. That is a fair debate.

[wtmusic]

1. great post dsc

thanks!!

[Egnever]

2. Yet another informative post

Thanks again for doing the legwork.

[ClintonTyree]

3. Don't confuse............

the Dean bashers with the truth. How anyone can fail to see that Howard Dean is the only candidate capable of restoring "the American dream" is beyond me. He is our last and greatest hope for this country to return to sane government. Thanks for the post and keep on working to educate anyone willing to listen and learn.