Thursday, May 11, 2006

David Cay Johnston Runs Loops Around Everyone In Tax Coverage

One of the silliest things Noel Greenwood ever did at the L.A. Times was to denigrate the talents of David Cay Johnston. He was at least partially responsible for Johnston's leaving the newspaper.

The consequence was that Johnston had to reach the New York Times before winning a Pulitzer and becoming the nation's greatest journalistic authority on tax legislation. His talents are fully in view this morning in the NYT with his trenchant analysis on the tax law changes now making their way through Congress.

In today's article, Johnston reports an estimate by the Tax Policy Center, a subsidiary of the Brookings Institution, that the legislation now nearing final passage, would pass 80% of its tax savings to the top 10% of taxpayers and that 20% of all the savings would go to the top 1%.

The savings in the topmost bracket, those taxpayers who make more than $1 million a year, amount to of $42,766. Those compare to savings of $5,656 to those making between $500,000 and $1 million and just $17 to those making between $30,000 and $40,000. What a shocking set of statistics!

Not only in his NYT articles but in a book, Johnston has outlined the wild disparities in the effect of tax legislation in the Bush Administration, and it is clear that whoever is responsible for this travesty has only the wealthy taxpayer in mind.

And the effects are likely to be long lasting, particularly if tax cuts now being voted are projected to last several years. The estimate for the cut is $69 billion in if the legislation lasts for a year or two, but is 15 times greater if the cuts are extended, which is frequently the case, for a decade.

We know President Bush is leaving office in two and a half years, but whoever is his successor may be hard pressed to undo some of the destructive work he has done, backing tax cuts which are not in the long range public interest, and, particularly, catering to his wealthiest campaign contributors.

While alterations of the alternative minimum tax would cost $31 billion this year, if the "patch" were to continue for 10 years, the loss in revenue would be more than $1 trillion, Johnston reports.

Altogether, the Johnston article gives us exponentially greater information than an article this morning on the tax cuts in the L.A. Times.

Johnston also points out that a provision in the new law would allow Roth IRAs to be tax free, and anyone would be able to convert his present IRA into a Roth IRA, thus assuring no more taxes in perpetuity. And unlike traditional IRAs, there is no mandatory withdrawal of money after age 70 and a half.

When one considers the lasting harm done to future generations by this package, it makes Randy Cunningham's corrupt dealings on military contracts look picayune. Especially the Republican majority in Congress, which may not last beyond the November elections, has failed to work in the public interest.

Meanwhile, the NYT is lucky to have Johnston, and the L.A. Times, thanks at least in part to Greenwood, is unlucky not to have him.


Blogger Bradley J. Fikes said...

A link to the article would have been helpful.

5/12/2006 9:00 AM  
Anonymous Anonymous said...

Using the projected short-term tax revenue gain from the expansion of eligibility for Roth IRA conversions is the selling out of the future for a quick fix in the present. Sounds like something only an addict would do.

5/13/2006 7:49 AM  

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