By GREGORY N. HEIRES

"We can have democracy in the country, or we can have great wealth concentrated in the hands of a few, but we can't have both." —Louis Brandeis Supreme Court Justice (1916-39)

The new Bush tax law — a blueprint for class warfare — will deepen inequality and put the federal government in a fiscal strait jacket. Before Congress approved the plan in May, opponents were hammering away at the proposed cuts on stock dividends and capital gains, describing them as a giveaway to the rich.

Cynical tax cutters
But the cynical nature of the tax package became even clearer in the days after President Bush signed it on May 28.

• First, an analysis by the Center on Budget and Policy Priorities showed that the law shut out millions of families with incomes between $10,500 and $26,625 — including most DC 37 members — from a provision that raises the child tax credit to $1,000 from $600. Unlike better-off families, they will not receive $400-per-child checks this summer.
• Then, a second study found that 8 million primarily low-income and single taxpayers won’t get a penny, despite claims by Republican politicians that everyone who pay taxes would gain under the new law. The study was done by the Tax Policy Center, which is affiliated with the Brookings Institution, the Urban Institute and the CBPP.

“The bulk of the money goes to the people at the very top,” said economist Dean Baker, co-director of the Center for Economic Policy Research. “They really want to give as much money as possible to the rich.”

Under Bush’s tax law, the top 1 percent of Americans would receive a $103,899 tax reduction over four years, according to the Institute on Taxation and Economic Policy. More than half of the tax cuts will go to the top 5 percent, and two-thirds will go to people in the top 10 percent income group.

In 2003, the bottom 50 million households will receive nothing, while the average refund for the middle fifth of households will be $217, according to the Tax Policy Center. The tax package will cost the federal government $350 billion in lost revenue.

But the CBPP says that the true cost could be three times that sum if Congress follows its practice of extending “sunset” provisions. On May 22, Republican House Speaker Dennis Hastert actually acknowledged that possibility, saying, “The $350 [billion] number takes us through the next two years, basically. But also it could end up being a trillion-dollar bill, because this stuff is extendable.”

“Of course we’d love to see it bigger, but this is a good start,” said Grover Norquist, who heads Americans for Tax Reform. The aim of the right-wing tax cutters is not only to provide welfare for the rich, but ultimately to starve government until the only choice left is to gut or cancel many public benefits, including Medicare and Social Security, which conservatives want to partially privatize.

Drowning government
Mr. Norquist has been clear about his ultimate objective: “My goal is to cut government in half in 25 years, to get it down to the size where we can drown it in the bathtub.”

Mr. Norquist recently urged Gov. George E. Pataki to block the tax increases that the State Legislature finally adopted to avoid 10,000 more layoffs in New York City and drastic statewide cutbacks in education and schools. “If we are looking two to three years or more and the deficit is still $400 to $500 billion, that’s going to be a problem,” Mr. Baker said. Faced with a mammoth revenue shortfall, Congress will have to enact unpopular tax increases or cut spending deeply.

“The basic proposition of this administration is that financial wealth, once accumulated, must not be taxed,” said economist James K. Galbraith, director of the University of Texas Inequality Project.

“But you need to be able to finance health care, education and environmental protection. That becomes very difficult when you are forcing other types of taxes, such as property and sales taxes, to go up. There is a limit to what the poor and middle class can afford.”