Dec. 14, 2010
“The Worse Off You Are, Your Taxes Increase”: Journalist David Cay Johnston Slams Obama-GOP Tax Deal
The U.S. Senate is on the verge of approving President Obama’s controversial tax deal with Republicans. Under the deal, Obama agreed to extend the Bush-era tax cut for the wealthiest Americans and reduce the estate tax in return for a 13-month extension of jobless benefits and a handful of tax credits for low- and moderate-income Americans. We speak to Pulitzer Prize-winning investigative journalist David Cay Johnston, author of Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense and Stick You with the Bill. [includes rush transcript]
DAVID CAY JOHNSTON: Well, failing to report that this is a tax increase on the bottom roughly 45 million households in America, close to 150 million people, that’s number one. This is a tax increase for those people. Secondly, that the more money you make, the bigger your tax cut under the Republican plan. Thirdly, that the estate tax reductions to 35 percent and a $5 million, or for a married couple $10 million, exemption involve money, in many cases, that has never been taxed. When very wealthy people die, the reason they’re wealthy is they’ve reported, legally, less income than they made on an economic basis, so they have lots of money that was never taxed. And now it will never be taxed, up to $5 or $10 million, because of these changes. And those are key things that I would watch for.
The other one is, we’re going to cut spending. Well, there are only four big areas of federal government spending: interest, which is low right now because interest rates are low, that will go back up; the military, the Republicans are not exactly known for wanting to restrain military spending; Medicare, Medicaid, that is, government-provided healthcare for the elderly, the disabled and the poor; and then Social Security, which people paid into and expect to collect in their old age. So what are they going to cut? Are they going to cut food safety inspection, which is a tiny, tiny fraction of a penny, and worsen a situation in which food-borne illness occurs in this country at something like—I think it’s 20 times the rate in France and seven times the rate in England? Are we going to further take away education from poor children? Are we going to raise the cost of a higher education, which reduces the value of the most valuable asset we have—young minds, that we should be training and developing so we have a prosperous future?
David Cay Johnston Slams Obama-GOP Tax Deal