Kinsley - The Return of Class War

Slate -- After two Bush tax cuts, consider how we now burden people at the bottom and at the top of the economic ladder.

A minimum-wage worker today must pay the FICA payroll tax of 15 percent (if you include the employer's share, as economists agree you should) on the very first dollar she earns. If she has children, she may qualify for an earned income tax credit, but she may not. If she works hard and moves up the income scale, she'll soon be paying another 15 percent in income tax. You might call this "double taxation," but President Bush doesn't.

Our minimum-wage worker most likely falls into one of the unadvertised holes in the Bush something-for-everyone tax cut. There is nothing in it for her. This gap around the minimum wage was supposedly inadvertent, and Republicans on Capitol Hill were eager to correct it. But Republican congressional straw boss Tom DeLay said incredibly that he would only allow the alleged correction as part of yet another big tax cut with more goodies for the serious income brackets.

Now look at the fellow who has a few millions or billions. He probably has paid no income tax on most of that pile, since investment profits are taxed only when they are "realized"—i.e., cashed in. Any investment profits that he hasn't cashed in when he cashes in himself escape the income tax forever. If he can hold on for a few years, under current plans, the estate tax will die before he does. His investment income also is exempt from the 15 percent FICA tax that hits the minimum-wage worker at dollar 1.

And now the tax rate on both dividends and capital gains is capped at 15 percent. This is supposed to alleviate the unfairness of having both a corporate income tax and a tax on the profits individuals earn on their investments in corporations. This is the one Bush does call "double taxation," and he rails against its injustice. In 2002 the total burden of the corporate income tax was barely one-fifth of the burden of payroll taxes, but it apparently strikes a more sensitive group of people.