This June 7 editorial in the New York Times - The Bush Economy - is extremely pertinent to some of the tax reform legislation being considered by Congress right now. The article points out that if all of Bush's tax cuts are made permanent, in ten years people making between $100,000 and $200,000 will pay five to nine percentage points more of their income in federal taxes than those making over $1 million per year. Those making less than $80,000 per year will see their share of taxes rise slightly or stay the same. As the article says, at this level the tax cuts are about "giving more money to those who have nothing to do with it except amass enormous estates for their heirs." And some of the current legislation being considered by Congress is unfortunately not helping us move in the other direction. Many Senators, from both sides of the aisle, are currently focusing a good deal of time to discussions on reforming both the estate tax and the alternative minimum tax (AMT). Repeal of the estate tax, which passed the House but most likely doesn't have the 60 votes needed in the Senate, would cost close to a trillion dollars in lost revenue over ten years. (Irresponsible reform could be almost as damaging.) Repeal of the AMT - rather than reform to make the tax more fair - would add nearly $1.2 trillion to deficits and the federal debt over the next ten years, assuming the tax cuts are made permanent. Lawmakers seem to be jumping at the chance to "fix" fairness issues in our tax system by looking to repeal the estate tax and the AMT. However, these reforms would only further protect the super-wealthy in our society from paying their fair share of taxes, and would leave more of the tax burden on everybody else. Congress should be looking for ways, instead, to raise revenues and constrain spending in order to bring down these unsustainable deficits; which, in the long term, will not only worsen our fiscal situation, but will worsen it disproportionately for the bottom 90 percent of taxpaying Americans.

CBO put out their Monthly Budget Review today. This one reports that in the first 8 months of FY 2005, the government incurred a deficit of $273 billion, which is $73 billion less than the recorded shortfall in the first 8 months of FY 2004. This is partially because revenues are up 15 percent, while outlays are only up 7 percent. They have risen $183 billion and $110 billion, respectively. Corporate income tax receipts are up 48 percent compared with the first 8 months of last year, and this increase primarily reflects a growth in corporate profits in the 2004 calendar year. Notably, spending on Medicare is also up significantly - more than 10 percent - as is spending on farm income-support, nutrition, and education programs, and disaster relief activities administered by the Department of Homeland Security. While the administration's tax and budget policies may appear to be cutting deficits in half, as the President promised, in reality they will end up costing much more in future years. For more info on that, click here.

Senate tax writers plan to introduce legislation this week that would repeal the unpopular alternative minimum tax. The bill, to be offered by Finance Committee Chairman Charles E. Grassley, ranking panel Democrat Max Baucus of Montana, Jon Kyl, (R-AZ), and Ron Wyden, (D-OR), will propose eliminating the tax, known as the AMT, effective January 1, 2006. It is unlikely to pass this year, however. President Bush wants the issue to be considered as part of a broad tax overhaul debate, which will most likely occur next year. Repealing the AMT would cost at least $600 billion over 10 years, the Congressional Budget Office estimated last year. The tax is expected to bring in $15 billion in the current fiscal year. Rep. Phil English, R-Pa., also introduced repeal legislation (HR 1186) in March. But congressional Republicans are expected to push a one-year extension of expanded AMT exemptions that expire this year rather than permanent repeal.