Separate Realities: The Dream and the Iceberg - Scarecrow Press

80 Chapter 2
Federal Tax Cuts: 2001 to 2006 During the first five years of his administration,
President Bush signed into law five major tax cuts (excluding the Katrina
Emergency Tax Relief Act of 2005). Three substantially reduced federal
taxes for privileged-class individuals and families (or extended reductions)
and two reduced federal taxes for corporations (which also benefited the privileged
class, but a bit more indirectly). By the midpoint of Bush’s second term,
his administration had enacted tax cuts totaling $1.65 trillion, plus another
$1.6 trillion by 2016 if all tax cuts were made permanent. 189 The following
paragraphs briefly describe the five major tax cuts and summarize their effects.
In 2001, the Economic Growth and Tax Relief Reconciliation Act of 2001
was passed by Congress with Republican and Democratic support; this law reduced
federal taxes on individuals and families by $1.35 trillion (over nine
years), with most of the reductions going to the top 20 percent and top 1 percent
income groups. 190 On May 28, 2003, President Bush signed the Jobs and
Growth Tax Relief and Reconciliation Act of 2003. This act “lowered the top
tax rate on corporate stock dividends from 35 percent to 15 percent, and reduced
the top capital gains tax rate from 20 percent to 15 percent.” 191 A 2006
analysis revealed that 71 percent of the economic benefits of this act went
to individuals with annual incomes over $200,000 and nearly 43 percent of
the capital gains and dividend tax cuts went to tax filers with incomes over
$1 million. 192 On May 17, 2006, Bush signed the Tax Increase Prevention and
Reconciliation Act of 2005. This third tax cut extended the 2003 capital gains
and stock dividend tax cuts through 2010. 193
Corporate taxes were reduced by the Job Creation and Worker Assistance Act
of 2002 and the American Job Creation Act of 2004. Both acts favored privileged-class
interests. The 2002 act provided workers with additional unemployment
insurance benefits totaling $14 billion, but U.S. corporations were
the biggest winners receiving $114 billion in tax cuts. 194 The 2004 act was supported
by 428 major U.S. corporations and trade associations. 195 It provided
$137 billion in tax cuts to large segments of the business community, including
manufacturers and multinational companies. 196
The Political Dimension of the Class War: Many Fronts The political dimension
of the class war goes far beyond tax cuts favoring the privileged class.
As we will see in later chapters, this dimension of the class war is fought on
many fronts. Republican officeholders are typically the most openly enthusiastic
supporters of privileged-class interests. But the enactment of many features
of the anti-working-class social, labor, and trade policies of the Bush administration
via recent congressional votes on a wide range of issues (e.g., see chapter
4: workplace safety, bankruptcy “reform,” class action litigation “reform,”
Central American trade policy) illustrate the political reality that many Democrats
routinely support privileged-class-favored policies. This was also true in
the previous administration; for example, President Clinton worked diligently
to ensure the passage of anti-working-class legislation such as the North American
Free Trade Agreement in 1993 and the so-called 1996 welfare reform act.