Three years ago, when George W. Bush ran for president, he popularized a new name for the estate tax. An estate was just a cold thing owned by the rich. Bush changed that. "Every family, every farmer and small-business person should be free to pass on their life's work to those they love, so we will abolish the death tax," Bush declared at the GOP convention. Rep. John Kasich, another Republican leader, said no one should have to "visit the undertaker and the IRS on the same day."
The calculation was simple. Every rich person who died was a dead person. If you thought of him as rich, you envied him. If you thought of him as dead, you pitied him. The estate tax sounded good. The death tax sounded bad. Bad enough, it turned out, to get Congress to phase out the tax as part of Bush's 2001 tax-cut package.
Now Republicans are taking the technique one step further. You don't have to die to shed the stigma of wealth. You just have to age. Rich people have become "senior citizens."
Bush's new economic plan would eliminate the tax on corporate dividends. Sunday on ABC's This Week, New York Times columnist Paul Krugman complained that ending the dividend tax wouldn't help the people in greatest need. To this, former House Speaker Newt Gingrich responded, "Over half the money last year of taxable income on dividends was for senior citizens." Monday, a reporter asked White House spokesman Ari Fleischer whether most beneficiaries of a dividend tax repeal would be "well above the average" financially. Fleischer replied, "More than half the money from dividend taxation [relief] goes to seniors." A few hours later, Bush added, "Over 50 percent of the seniors receive dividends. … Many of the shareholders that pay the taxes are senior citizens."
Outlining his plan in Chicago Tuesday, Bush milked the old-folks theme. "About half of all dividend income goes to America's seniors, and they often rely on those checks for a steady source of income in their retirement," said the president. "For the good of our senior citizens … I'm asking the United States Congress to abolish the double taxation of dividends."
Liberals don't dispute that half the beneficiaries of a dividend tax repeal would be old folks. They simply note that the bulk of these old folks also happen to be well-off. The Center on Budget and Policy Priorities estimates that under Bush's plan "nearly 40 percent of the benefits of the tax cut that would accrue to elderly individuals would flow to the 2.5 percent of elderly people with incomes exceeding $200,000. Nearly three-quarters of the benefits that would go to the elderly would flow to the 19 percent of elderly with incomes above $75,000." Citizens for Tax Justice calculates that most of the benefits received by old folks would go to those making more than $200,000.
If Bush adds tax cuts for the old to tax cuts for the dead, there's no telling how far down the life cycle he could go. Tax breaks on leisure travel, in the name of older Americans? Tax breaks on second homes, in the name of the middle-aged? Tax breaks on capital gains, in the name of the overweight? Inventing euphemisms for the rich never gets old.