Washington, D.C. could take some tips from Jeb

  • David Broder / Washington Post columnist
  • Saturday, December 8, 2001 9:00pm
  • Opinion

WASHINGTON — When the Bush brothers got together in Florida the other day, aides to Gov. Jeb Bush say he gave the president only a general description of what he was going through, trying to close a yawning deficit in the state budget. That’s too bad. He had a lesson to teach his older brother — and the rest of Washington.

Florida, like most other states, has been hammered by the recession and by the aftershocks of Sept. 11, which damaged the travel industry and the tourism so important to its economy. Bush had to call the Republican-dominated Legislature into two special sessions in order to fill a hole of more than $1 billion in the budget.

Last week, he persuaded the state Senate and the House of Representatives, on successive days, to take a step he found particularly painful. They voted to postpone a big tax cut, scheduled to take effect on Jan. 1, until the middle of 2003 or later.

The saving of $130 million in the current budget year will reduce, but not eliminate, the painful spending cuts Bush has had to make. But it shares the burden of tough times more equitably, asking affluent Floridians to give up something for the sake of the state’s school children, Medicaid patients and others.

The revenue measure involved is called the intangibles tax. Currently, an investor pays $1 to the state for every $1,000 he or she owns in stocks, bonds or other securities. To help small investors, the first $20,000 of such holdings (or double that for couples) is tax-exempt. That exemption would have risen to $250,000 on Jan. 1 (or $500,000 for couples) had Bush not lobbied legislators for the delay.

Bush had campaigned for a phase-out of what he called this "onerous" intangibles tax. His fellow conservatives said those investors had already been taxed by Uncle Sam on their incomes and claimed it was unfair for the state to tax them again on their savings. They argued that delaying the tax cut was essentially the same as raising taxes. State Rep. Connie Mack of Fort Lauderdale, namesake son of the former senator, told the St. Petersburg Times, "I think raising taxes during a recession is wrong."

But Bush said the tax break for affluent Floridians would have to wait.

All this would have a familiar ring to President Bush, except for one thing. He is refusing to bite the bullet as his brother has.

George Bush campaigned for president on the promise of cutting taxes, and made that the first priority of his administration. When the Bush tax cut, officially estimated at $1.3 trillion but actually much larger, was passed last spring, administration officials offered ironclad assurances that it was easily affordable in a 10-year span when surpluses were supposed to total $5.6 trillion. The mantra then was, "We’re returning to the taxpayers less than one-fourth of the surplus the government will enjoy."

Now, of course, the surplus is gone. Partisans can argue how much of it disappeared because of the recession, the rising costs of the war on terrorism or the tax cut itself. But it has disappeared, and Bush’s budget director, Mitch Daniels, says the red ink in the federal budget will continue for at least three years.

Unlike his brother, George Bush is adamant about refusing to look at the revenue that will be lost in coming years because of promised tax cuts. And most Democrats are afraid to talk about freezing or delaying them. Instead, the two parties are jousting over the size and shape of additional tax reductions.

Suppose a sudden spasm of political courage or fiscal prudence were to sweep through Washington. Who would be called upon to sacrifice? Citizens for Tax Justice, a liberal group, has run that question through its computer model. It reports that if the Bush tax cut were frozen now, it would cost someone making up to $15,000 a year about $10 annually. A middle-class earner with an income between $44,000 and $72,000 a year would lose $452. More than half the tax cuts to come will go to the top 1 percent of the population, who will receive an average benefit of $50,005 on incomes of $372,000 or more.

A separate calculation by another research organization, the Center on Budget and Policy Priorities, came to a similar conclusion. "About 95 percent of the savings (from freezing the scheduled tax cuts) come from provisions that are of no significant benefit to low- or middle-income families," its analysis showed.

Given the cost-cutting that budget deficits will force on Washington, someone has to ask why these top-bracket tax cuts should be untouchable. Is there a Jeb Bush in the crowd?

David Broder can be reached at The Washington Post Writers Group, 1150 15th St. NW, Washington, DC 20071-9200.

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