This editorial appeared on the opinion page of the Pittsburgh-Post Gazette on Friday, April 6, 2001

Needy Need not Apply: One in Four in Pennsylvania will Get Gothing from Bush's Tax Cuts

By Stephen Herzenberg

HARRISBURG - In his election campaign, President Bush promised that his policies will ensure "no child is left behind." Yet the tax proposal the president is still shopping would leave behind precisely those children who most need help, along with those children's families.

In Pennsylvania under the Bush tax package, one of four families would get no tax cut at all. Altogether, 413,000 Pennsylvania families would get nothing from the administration's plan. Some 835,000 children - 29 percent of the state's total - live in these families.

The Bush administration has underscored that its proposals would reduce income taxes for everyone who pays them. But many families at the lower end of the income scale do not earn enough to owe federal income taxes. These families do, nonetheless, pay a lot of federal tax - payroll taxes for Social Security and Medicare, and excise taxes on gasoline and other purchases. These families also pay state and local sales and property taxes that help cover the cost of federally mandated programs. But none of the taxes that these families pay are cut in the Bush plan.

Because these 413,000 Pennsylvania families don't pay federal income tax, nearly all of them won't benefit either from the Bush proposal to double the child tax credit from $500 to $1,000.

Thus when the president told Congress last month that "I want to help families rear and support their children, so we doubled the child credit to $1,000 per child," he apparently didn't mean the low- and moderate-income families who most need this credit.

At the same time, the Bush proposal extends the child credit to families that have incomes between $130,000 and $300,000.

Expansion of the child tax credit to higher-income families is only one of many ways the Bush tax package tilts toward the well-to-do. When all of the president's tax proposals are taken together - including elimination of the tax on the very largest 2 percent of estates and reduction of income tax rates, 39 percent of the benefits will go to the top 1 percent of households, even though those households now pay just 24 percent of taxes.

The good news is that leading Republicans and Democrats in Congress are recognizing the importance of extending tax relief to low- and moderate-income families. The Republican leadership of the House Ways and Means committee voted to make the child credit available to some of those low- and moderate-income working families excluded by the president's plan - an important step in the right direction.

In another positive step, the Senate on Wednesday voted to reduce the size of the president's tax cut by $450 billion. But the president continues to hold out hope that he will win his original proposal. If he does, besides getting no tax relief, there is a second way that the president's plan will leave many children and hard-working families behind. Because the Bush tax proposal provides big tax cuts to the wealthy, it would drain resources for other priorities.

The tax cut is often described as costing $1.6 trillion over 10 years, but official congressional estimates put the price tag higher, at $2.6 trillion (including $400 billion in added interest payments on the national debt).

A tax cut of this magnitude would consume most if not all of the budget surplus available outside of the Social Security and Medicare trust funds. It would leave little for improving public schools, bolstering workers' skills, helping middle-class families pay for college or quality child care, helping seniors pay for prescription drugs or restoring long-term solvency to Social Security and Medicare.

This does not mean the nation should forgo a tax cut. We can provide significant tax relief to the middle class and families working for modest wages, and this can be done for a much smaller cost than the president's plan entails if we scale back the oversized tax cuts for those at the top of the income scale. For example, we could provide relief to taxable estates that include a family-owned farm or small business for a modest fraction of the cost of repealing the estate tax entirely, and redirect the savings to critical needs.

A basic challenge today - in a state and a nation marked by income polarization - is to create a future in which all children and all families do well. For reasons that include the expansion of low-wage service jobs to globalization to the way new technology favors more educated workers, creating a future in which everyone does well will not be easy. The Bush tax package would make achieving such a future a lot harder.