Bad Advice, Reeking of Hypocrisy
Get the real facts on the Bush tax plan and how it affects Latinos
This is a warning to the Latino community and our friends! There is a gang of self-appointed folks who have made up their minds, even before the final bill is ready, that you do not need, that you do not benefit from and that you should, blindly, follow their leadership and reject the 2003 tax reduction and economic stimulus plan just announced by President Bush. My advice is, ignore them for now; first learn how the plan affects you and your family. Your "protectors" -- to be identified later -- have a hypocrisy-soaked agenda that is not your agenda. Get the facts and decide what?s good for YOU; you?re busy raising a family or running a business, not playing politics!
Published on LatinoLA: January 13, 2003
All Latino Households
As of 2001, there were roughly 10,500,000 Latino households in the 50 United States. About 19% had an annual income of $15,000 or less. Slightly over 50%, one-half of Latino households, had an income from $15,000 to $50,000 (33% had $15K to $35K; 17% had $35K to $50K).
About one-quarter, 24%, of Latino households had incomes of $50,000 and up to $100,000 in 2001. Almost 8% had incomes over $100,000! About 14% of all Latino families made over $75,000 in 2001 (the income level of the "rich", per some of the Democrat demagogic "experts").
There are about 5,800,000 Latino married-couple households in the U.S., or 55% of the Latino total. About 10% had only $15k or less income in 2001. Over 31% of these families, mostly two-income families, had income between $15K to $35K. (In more than 75% of Latino married-couple families, both partners work!) More than 19% of these families are in the $35K to $50K range and 19% are in the $50K to $75K category. The "rich" Latino families are 19% of the total; 1,098,000 married couple Latino families had 2001 income over $75,000 with 547,000 such families making over $100,000. If the critics of Mr. Bush had their way, these last two groups of Latinos would give up their tax relief in favor of "working families" or "regular folks", as one Democrat presidential aspirant calls the "non-rich".
The Latino Elderly
Latinos are a young community. For me, at 75, "elderly" means the really old, like maybe 85 years old, or more! But U.S. Census statisticians break data at "65% years and over" so "elderly" Latino households total only 655,000 as of 2001 with about half, 332,000, being married-couple households. Only 114,000 households or 17 % had incomes over $50,000 in 2001 and only 28,000 Latino elderly households had incomes of $100,000 or over.
The Reality of the Bush 2002 Plan
By now, your eyes and attention span have to be suffering from all these numbers put before you. In fact, you were saved from even more that could have been imposed on you such as single Latino taxpayers, single elderly, unmarried mothers with children and on and on! That said, here is some of what President Bush proposed last week. For now, not covered is the President?s $3,000 per person "Personal Re-employment Accounts" which would help the unemployed in seeking work.
Instead of waiting until 2004 and 2006, immediate tax rates of 10%(new), 15% (15), 25% (27.5), 28% (30.5), 35.5% (33), and 35% (39.1) will apply to 2003 income ("old rate" is in parentheses). Example: your tax bill (and withholding) would be reduced retroactively to January 1 of this month by the difference between the new Bush rate of 25% and the old rate of 27.5% or 2.5% of your taxable income (starting at $45,000+ for the 25% rate).
Child tax credits of $600 per child would go up to $1,000 as of January 1; if you have 3 kids, you will have $1,200 taken off your tax bill! Under this Bush plan, a government check for that total will be cut ASAP after the President signs the bill and mailed to you! Don?t forget; this is a tax "credit", not a deduction to your "Adjusted Gross Income (AGI) against which the tax rate is applied. Millions of Latino families will benefit depending on how many kids they have at home (there are around 12 million children, collectively, among the 5,800,000 Latino married?couple families); about 2-3 million Latino families will benefit from the child tax credit. The White House economists are still working out the details on how lower income families eligible for EITC (Earned Income Tax Credit) will fare under the plan.
The "marriage penalty" on couples would be eliminated immediately instead of waiting until 2009 (!). This change, along with child tax credits and the new tax rates will provide tax relief under the Bush Plan to somewhere around 5,000,000 Latino married-couple families, with an average reduction of $1,000! That cumulative tax reduction provides an injection of about $5 billion dollars into Latino disposable income for each year of 2003, 2004, 2005, 2006 etc. etc. This will take place unless politically motivated elected officials frighten the public and supporters of this approach to economic recovery into emasculating the Bush Plan. So far those brave but grossly unimaginative Democrats propose a "competing" plan whose only feature is a gigantic stimulus of a $300 check mailed from Washington! Tried last year, it had underwhelming results as a stimulus.
The new 10% bracket which was not to take effect until 2008 (!) will be retroactive as of January 1 at up to $7,000 taxable income for single taxpayers (was $6,000) and up to $14,000 for married couples (was $12,000) before the 15% rate applies to the AGI. It should be stressed that many of the 1,200,000 or so Latino taxpayers in this category are young part-time workers or students or adults working part-time to augment household income. Married-couple homes with only one minimum-wage employed parent ($12K to $15K) are not common though it does occur in rural settings or where workers are illegal or where unemployment has struck. Beyond these instances of very low income, around 600,000 households of single Latino mothers with kids will gain on average over $500 in disposable cash if they are working.
Tax Relief For Latino Business
There are over 1,500,000 Latino-owned small businesses in this country with the vast majority being sole-proprietorships and most of the rest S-Type corporations and partnerships. President Bush has proposed an immediate 3-fold increase from $25,000 to $75,000 in expense tax write-off for small businesses. This will be of clear help to hundreds of thousands of small businesses, especially start-ups, owned by Latinos. The higher expensing limit will facilitate and promote the purchase of technology, equipment, machinery.??the life-blood of so many businesses as they are set up or expand.
In the U.S., one half of the national economy consists of small businesses and they are the largest producer of new jobs. President Bush?s Economic Council projects that 23 million small business owners will benefit by about $2,000 each in tax relief in 2003. Of those, about 1,000,000 are Latino-owned and engaged in a business that can utilize this tax break. Sole proprietors and partnerships with creative imagination and good business sense will be able to optimize the combination of individual income tax relief and the business write-off increase for a better participation in the American Dream.
The End of Dividend Double-Taxation
Perhaps the most controversial part of President Bush?s proposal is to stop taxing individuals for income from stock dividends paid by corporations to shareholders after the corporation has paid taxes on its profit and then paid those dividends out of the post-tax remainder. Its main purpose is, of course, to encourage investment, foment capital formation and create resulting jobs?.over the long haul. The many Democrat Senators who are presidential wanna-be?s have all attacked the President on this feature of the plan under the mantra: "it?s a gift to the rich" or "this plan is only tax cuts for the rich", bla, bla, bla. They never define who "the rich" are in income level. Such discussion is always piously accompanied by the clich? of concern for "working families". The would be do-gooders never realize that millions of Latinos aspire to be "rich" and will appreciate the Bush plan for years, as they move to their goal. They seem to forget that millions of Latinos have or will have retirement accounts made up in part of equity stocks paying dividends and that millions of Latinos now own or will eventually have a share in the stock market just like the 55% of Americans that are currently shareholders!
As they lock-step in negative rhetoric, the partisan readers of DNC talking-points also show little respect for the maturity or awareness of reality that pervades the Latino community. Even the term "working families" insults (how in the hell do they think most rich people got rich? By working hard!) and the Clinton/McAuliffe/Gore favorite, " tax benefits for the rich" is so boringly overdone that it is now a turn-off.
Identical phrases are found in union E-Mails from "Working Families e-Activist Network-AFL/CIO" (Do union folks all enjoy paying taxes?). And how about this gem from the DNC received last week:
"Help the Democratic Party fight Bush's tax scheme!"
Click here to get the facts on Bush's tax scheme and to spread the word about who will really pay the price.
Click here to send a message to President Bush demanding that he stop exploiting America's economic troubles to pass more tax giveaways. Tell him to work with Democrats to pass a plan that will get our economy moving again!"
Remember Al Gore?s campaign slogan/attack on President Bush?s first tax reduction proposal: "It?s Just A Risky Tax Scheme"? Nothing has changed??the same intellectual bankruptcy survives! Even Democratic Latino Caucus leader, Congressman Roberto Menendez from New Jersey, only had this to say, "Bush's tax plan would primarily benefit the rich.", also ignoring the fact that the Bush tax plan makes the tax code more progressive; i.e. the highest income folks will get the least percentage reduction in their tax rates.
After this dose of class warfare, Congressman Menendez offers a little ethnic shot along with some self-aggrandizement: "As the highest-ranking Hispanic in Congress, I can tell you that many Hispanic families will get little from the Bush plan." Feel better, Congressman?
Not surprisingly, we didn?t hear a single word about Mr. Menendez turning down the many thousands of tax dollars the Menendez family won?t pay, thanks to the Bush plan; given his $150,000 salary, his perks, any spousal salary from the Union City Board of Education, and the rental income from his Union City buldings worth several hundred thousand dollars. And, if the stock is still in his portfolio, there should be thousands of dollars in dividends from the corporate stock he declared in May 2002 which included ATT, Bank 1, Kimberley Clark, Maytag, Merck Pharmaceutical, Morgan Stanley, Motorola, Pepsico, Pfizer Pharmaceutical, Prudential Funds, and good old Disney Company.
Mr. Menendez, I am not high-ranking like you but I do know that, by Democrat standards, you are clearly rich. Nevertheless, I don?t begrudge you your tax savings; I am glad you will save many thousands of income tax bucks in 2003 that you can spend to help our economy. And further, unlike the down-talking guys like you, I am optimistic about America, about our President and the overall wisdom of the Congress.
Your patrona, Nancy Pelosi, also rich and liberal, the milliionaire Senators like Kerry, Kennedy, Clinton, Corzine, our own Feinstein and Boxer, etc. all render judgements on how to help the poor. I guess we should be grateful that you, Mr. Menendez, and all these fellow Democrats stand obstinately in the way of letting the Bush tax cuts go through. That way, all we pitifully uninformed, misguided and culturally deprived Latinos are saved from making up our own minds about what the Bush plan can do for our families. Wrong! Keep your advice for your media ops or speeches on the House floor; we?ve learned through the years that "guidance" from Washington seldom, if ever, helps with the household budget!
By the way, Democrat politicians should also realize that for me and other Californians, a lot of what we gain if the Bush plan goes through will be offset by the new taxes. These are mostly regressive increases hitting low-income families badly, that their incompetent soul brother, Governor Gray Davis, will impose on us this year.
So I appeal to our "protectors", the Democrats; vote for the Bush plan! Otherwise you will only add to the misery that Latinos in California and other job-hungry states are suffering?.and they won?t forget. And please tell your colleague who just chickened out of running for President, Tom Daschle, to chill. He called the President?s plan that permits each of 92,000,000 taxpayers to keep $1,100 more in thir pocket on April 15th??he called the idea "obscene"! What are you on, Tom? The last guy who ridiculed allowing Americans to keep more of their hard-earned money at income tax time is now writing mediocre, poorly-selling books, with his wife Tipper as co-author!