Further regression

I've posted about this in the past, and I'm sure I'll be posting about it in the future -- Bush's plan to do away with our progressive tax on wages and income in favor of a flat tax intended to shield all income on savings and investment from taxes.

Writing in The New Yorker, John Cassidy unveils the second term agenda you won't hear Bush or his supporters talking about this week in New York.

Most people already know that Bush’s tax cuts favored the rich, but the size of the giveaway was startling. Based on figures contained in a recent study from the Congressional Budget Office, it now appears that about two-thirds of the benefits went to households in the top fifth of the income distribution, and about one third went to households in the top one-hundredth of the distribution. To put it another way, families earning $1.2 million a year—that is, the richest one per cent in the country—received a tax break of roughly $78,500. Families earning $57,000 a year—middle-income families—got a tax cut of about $1,100.

Even these numbers, though, do not convey the full ambition of the Republicans’ agenda, which potentially involves a historic restructuring of the American system of government. Roughly two-thirds of taxable income is paid to workers in the form of wages and benefits. The other third goes to reward capital, or accumulated savings, in the form of corporate profits, dividends, and interest payments. If Bush’s economic agenda was fully enacted, the vast bulk of these payments wouldn’t be taxed at all, and labor would end up shouldering practically the entire burden of financing the federal government. In a new book, “Neoconomy: George Bush’s Revolutionary Gamble with America’s Future,” Daniel Altman, a former economics reporter for the Times and The Economist, describes what such a system might look like. “The fortunate and growing minority who managed to receive all their income from stocks, bonds and other securities would pay nothing—not a dime—for America’s cancer research, its international diplomacy, its military deterrent, the maintenance of the interstate highway system, the space program or almost anything else the federal government did.... Broadly speaking, that fortunate minority would be free-riders.”

It would seem outrageous that Bush would propose such a thing (then again, the Inheritence Tax was devised by a Republican; a century later, Republicans call it the "Death Tax"), and of course he won't. That would scare away any but the most profound supply-siders (maybe even David Brooks would get a clue). Instead, he plans to do this incrementally, a stealth reorganization of the tax code and a secret shifting of the tax burden to the middle class and working poor.