As usual, Democrats are whining about George W. Bush’s proposed tax cut. The tax cut will disproportionately benefit the wealth, the Democrats complain. So here’s an easy test to tell whether you are not you are a Democrat:
A man walks up to you and says he has some good news and some bad news. The good news is that the man is going to double whatever your current income. The bad news, the man says, is that he’s also going to double Bill Gates’ current income.
If you’re like me and wonder why that’s bad news, you’re not a Democrat. If you go on about how such a scheme is designed to benefit the wealthiest on percent at the expense of social justice, then you’re a Democrat.
The reason that the wealthy benefit disproportionately from tax cuts is, of course, because they have more taxable income. Lets look at a couple hypothetical taxpayers in a hypothetical country who get a hypothetical tax cut.
Taxpayer A earns $1 million a year in income and pays 30% of that in taxes. Taxpayer B earns $20,000 a year and pays 15% of that in taxes. Along comes George W. Bush who says, “Lets cut everyone’s taxes in half.” The result? Ted Kennedy gets on the floor of the Senate and complains that 99 percent of the tax cut goes to the rich, while a mere 1 percent of the tax cut goes to the poor. And he’s right.
Our $1 million earner gets and additional $150,000 while our person making $20,000 gets back a mere $1,500. Now personally if I’m making $20,000 a year (which happens to be close to my actual salary), what the rich person making $1 million gets back from Bush’s tax plan is completely irrelevant to what I get back. Both of us have had our tax burden cut in half and to that extent are better off. It’s only if you want to start using income distribution as a marker (i.e. there’s just too damn many rich guys) that this sort the Democrats criticism begins to make any sense.