IRS to Increase Audits

The money has got to come from somewhere. This article about the tax cuts for the wealthy is proof that Bush's quip about his base - the "Haves and the Have-Mores" is not just a joke.

Bush’s second target, however, may exceed even the mind-boggling $11.6 trillion. The second primary objective is to totally restructure the entire tax code before leaving office. The campaign for the second target kicked off with the release on September 30, 2005 of the final report of Bush’s appointed special Advisory Panel on Tax Reform. Expectations are that the Panel will recommend, and Bush and Congress eventually propose, not only further breaks for the wealthy and corporations but also a scaling back of many of the token tax cuts given to workers and consumers between 2001-04 that were considered politically necessary at the time to ensure passage of tax cuts for the wealthy. In addition, the Panel’s report is expected to launch a fresh, new assault on the few benefits in the federal tax code that working class households have been able to take advantage of for many years—such as home mortgage interest, state and local tax deductions, and deferral of taxes on health insurance premiums.....It is estimated that a full and permanent repeal of the Estate Tax will amount to approximately $1 trillion in lost tax revenue and interest over the next decade, followed by trillions more over subsequent decades.

Hurricane Katrina has recently dealt a wild card into the Estate Tax cut game, however. With what looks like $500 billion needed to rebuild the Gulf Coast, it will be difficult (though not impossible) for pro-corporate/pro-wealth interests to pass another $1 trillion tax cut for the wealthiest 1 percent of taxpayers at the same time.

As a contingency, Bush and the pro-wealth interests in Congress have developed a fall back position nearly as generous in the event permanent repeal is not immediately possible. Led by Republican Senator Jon Kyle of Arizona, an alternate proposal on the table in the Senate at present is to raise the Estate Tax’s exemption immediately to $7 million (or higher) and immediately reduce the 45 percent tax rate to a 15 percent rate equal to the tax on capital gains. That would produce a tax cut for the wealthiest 0.3 percent households of more than $700 billion over the coming decade alone, with more to follow. And even that $700 billion is probably an underestimation, since other provisions in the legislation and before the courts at present will render state-level Estate Tax laws that now exist null and void as well.

However the final results are calculated and whatever the details of the final outcome, it is virtually assured that another multi-trillion dollar tax cut for the wealthiest taxpayers is about to pass within the next 12 months.