By Tim Leeds
Now that the smoke or paper-shuffling is starting to clear, the effects of the 2001 federal tax cut and rebate are starting to come out.
It sounds like they might not have much of an effect for quite a few people. According to the new tax tables we have at the Havre Daily News, only people in the top tax bracket will be seeing anything.
A single person grossing $5,320 a month will get a tax cut of $16 a month. A married person making $5,400 a month will get a cut of $12. People with a lower income, like a single person earning $2,000 a month, won't get any cut at all.
Not that that surprises me much. My limited experience with the tax cuts in the last 20 years is that they don't seem to cut much for most people. I seem to remember Ronald Reagan touting his tax cuts as a way to stimulate the economy by cutting taxes for the people making the most money. "Trickle-down economics" comes to mind.
The theory, as I remember it, was that if you give more money to the richest people, they spend more, hire more people to work, invest more, and everyone benefits from the increased spending. Oddly enough, that didn't seem to happen with the Reagan tax cut.
I don't remember my parents talking about getting any more money or paying any less in taxes at that time.
Now George W. Bush has been elected running on a platform of tax cuts. His tax cuts have been passed and signed into law, and are reminiscent of that early '80s cut.
Leah Platt has written some interesting pieces for The Prospect, a biweekly magazine established in 1990 to provide a place for people to examine national policies. In an April article, she states that 20 percent of wage earners, that is the 20 percent of people making the most money in the country, will receive 62 percent of the tax cut. The 80 percent of the people making the least money in the country will get the other 38 percent of the cuts.
Platt cites information from the Washington-based Citizens for Tax Justice that breaks the cuts down further to show their effect on Montana. Because of the lower average income in Montana, she says, Montana's average tax cut will rank 49th out of 50 states and Washington, D.C., 31 percent below the national average.
Here's another possible net effect of the tax cut (which, by the way, was supported by Sen. Max Baucus, who has touted himself as one of the Democrats who worked to pass a bipartisan tax cut). If Montana continues to pay about the same in taxes as it did while other states pay less, where Montana dollars are spent could shift from Montana to other states.
The devil is in the details. Who is going to be receiving this $1.3 billion tax cut, and who is going to pay for it? Montana receives a lot of federal money in assistance, to pay federal employees, to pay for highways and parks and more. Of course, Montana's taxes won't go down much, but the money the government has to spend will. Will we be seeing less of a return on our tax dollars? That does look likely.
It doesn't surprise me too much, though. When the tax cut was proposed during last year's campaign, I thought, "Didn't we try this 20 years ago?" I didn't remember it working that well then.
The voters seemed to forget about that. Now we are right back where we were then.
It's funny how things can be shown in a way that makes everyone happy. Saying, "We will reduce your taxes and stimulate the economy" has a great sound it certainly seems to win votes during an election. Unfortunately, the "your" in that statement seems to be a collective "your." Taxes were reduced for American citizens, but it doesn't look like they will be reducing mine. Or those of most people that I know.