The budget IS helping the poor

Myriam Marquez

August 17, 1993|By Myriam Marquez

IT'S creating class warfare. It's soaking the rich.

That has been the rhetoric since the compromise budget plan squeaked through Congress.

If you are among the 1.2 percent of Americans who are the top wage-earners in the country, it's understandable that you would be unhappy with the prospect of higher taxes on your hard-earned money.

But let's look at the flip side -- those working families now at or near poverty.

Thanks to this budget, working families that earn up to about $25,000 a year will get an increase starting next year in their earned income tax credit.

For a family with two or more children and a parent who works full time and earns $11,000, this will mean a substantial break of about $3,554.

Families with incomes that low pay no income taxes, so the credit can translate into a big incentive to save for, say, a down payment on a modest home.

By contrast, couples earning about $200,000 a year will pay an average of $1,375 more in taxes, depending on the deductions they are eligible for.

It's hard to figure how such a plan is creating class warfare or soaking the rich.

What it is trying to do is help people out of poverty by rewarding their hard work at low wages.

Hasn't that always been the American way?

Didn't the federal government virtually give away land in the 1800s to inspire people to move west and build this country up?

If anything, the carrot of an increased tax credit at the end of the year should help keep people from choosing welfare over a minimum-wage job.

And if that happens, every taxpayer -- rich, poor or middle-income -- will benefit.

This is no little thing, this tax credit, though the news media have paid little attention to it.

President Clinton's goal was to boost the wages of every working family above the poverty level.

Though the budget compromise fell short of that goal, it still will make it possible for more than three-quarters of the working families now at or bordering the poverty level to move up.

Fifteen million to 20 million poor working families will get that boost.

And states hard hit by the recession, such as California, will benefit greatly by the tax credit.

More than 2 million poor working families in California should get an extra $3.3 billion for the 1994 tax year.

Meanwhile, about 1.4 million wealthy Americans in the 50 states will pay higher taxes.

The well-off may believe they are getting soaked, but in reality their new tax rates are still substantially lower than they were in 1980.

Plus, the rich will be able to buy their yachts, furs and jewels and not be hit with a 10 percent luxury tax that President Bush agreed to in 1990. Not only will they not be hit, but if they have made such purchases this year, they can get their money back on that 10 percent.

Of course, you haven't heard Senate Minority Leader Bob Dole complain about the luxury tax being repealed retroactive to Jan. 1.

As Robert J. Samuelson of Newsweek magazine points out in this week's issue, Senator Dole must be suffering from amnesia when he insists on calling President Clinton's tax plan "the largest tax increase in world history."

In 1982, when Republicans controlled the Senate, Congress raised taxes by $214 billion over five years. Taking inflation into account, the 1982 increase is actually larger than the $240 billion in Mr. Clinton's budget.

Whether the economy grows under Mr. Clinton's compromise budget plan is anybody's guess at this point.

But what can't be denied is that this budget aims to help the working poor buy those proverbial boots with their bootstraps for pulling people up.

Myriam Marquez is an editorial page columnist for the Orlando Sentinel.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.