PAY UP or save up.
This is one decision that voters must make in the November presidential election.
Americans are taxed at an alarming rate, from the time they wake up in the morning and pay sales tax on their breakfast value meal at the local fast-food restaurant to the time they watch television in the evening and pay a cable tax. In between, their earnings are taxed, their property is taxed, their electricity is taxed, and the gasoline for their automobiles is taxed.
What is the true definition of a two-income family these days? One parent works to take care of the family, and the other works to subsidize the government. The typical family pays an astonishing 40 percent of its income to the government.
Since both presidential candidates have recently released their tax-reduction proposals, one must ask which plan is fairer and benefits working Americans more.
George W. Bush's call for across-the-board tax relief is based on trust - trust in families to keep more of their income and spend it as they deem appropriate. Families face different challenges: Some require better child care, others invest to save for college tuition. Many would prefer to have one parent remain at home with their children. No matter how creative Washington tries to be, big government programs cannot be tailor-made to fit the needs of every American family.
To give working families tax relief, a Bush administration would lower marginal tax rates for all taxpayers. It is simple and fair. His tax-reform proposal would replace the current five-rate structure with four lower rates. But the focus would be on low- and middle-income families, giving them the largest percentage reduction. It would cut taxes by 33 percent for the lowest-income Americans, by 20 percent for the middle class, and by 17 percent for the wealthiest households.
Here's what that means. A working mom supporting two children on an income of $22,000 faces a higher marginal tax rate than a lawyer making 10 times that salary. As a result, the incentive for her to work an extra shift or spend money to take night-school courses at the local community college is taken away by the government. Bush believes that this roadblock to success should be removed. Under his plan, this working mom would pay no taxes.
Families would benefit in other important ways. The Bush plan would eliminate the marriage penalty by restoring the 10 percent deduction for two-earner families, allowing them to deduct up to an additional $3,000 per year.
Further, Bush has proposed tax incentives for the creation of education savings accounts, allowing families to set aside pretax dollars so their children can earn an education in the school of their choice.
Bush also addresses economic development. The top income tax rate would be capped at 33 percent, and the research and development tax credit would be made permanent, allowing the entrepreneurial spirit of the technological and manufacturing sectors to grow unimpeded.
Finally, Bush would never veto legislation to eliminate the estate tax, as the Clinton-Gore administration recently did. Impacting hard-working Americans everywhere, from dairy farmers to local merchants, the death tax can shatter a lifetime of achievement and hard work.
Bush's plan is simple and fair to all Americans, yet does not run counter to the balanced budget policies of the Republican Congress. Of the $4.6 trillion in federal surpluses projected for the next 10 years, Bush keeps half untouched in the Social Security trust fund, $1.3 trillion for items such as education and a stronger national defense, and the balance for tax relief.
Vice President Al Gore and his allies use stale scare tactics in an attempt to score political points by relentlessly disparaging the tax relief issue. It is a theme continually exhorted in the vice president's class-warfare message.
For instance, Gore criticizes Bush's plan as being favorable to the rich, but ignores the reality that high-income earners pay a dramatically heftier portion of their income to the government in taxes.
Tell the newlyweds starting out on their own that tax relief is "risky." As the Republican nominee noted in his acceptance speech, Gore would have described Thomas Edison's invention of the light bulb as "a risky anti-candle scheme."
In stark contrast to Bush's plan, Gore's tax-relief proposal prescribes who gets what. As the Wall Street Journal opined in a recent editorial, "Americans must engage in certain Gore-approved behavior to earn the right to even be considered."
Single without children? No tax relief under the Gore plan. A senior citizen? No! In fact, more than 50 million of America's 94 million taxpayers fail Gore's litmus tests for tax relief. In contrast, every single taxpayer would earn tax relief under the Bush plan, starting with low- and middle-income wage earners.