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Legislation & Politics | ||
Letter to members of the Senate Finance Committee opposing the Tax Relief Act of 2005November 9, 2005 Members of the Senate Finance Committee Dear Senator: On behalf of the 1.4 million members of the American Federation of State, County and Municipal Employees (AFSCME), I strongly urge you to oppose the Chairman's proposed $68.8 billion Budget Reconciliation tax package — "the Tax Relief Act of 2005". We oppose this plan for a number of reasons. The net $68.8 billion tax break plan will divert needed funds that states and localities would otherwise use to deliver vital public services to the nation's children, seniors, and needy families. Furthermore, given the federal government's need to rebuild the Gulf Coast, pay for the long-term costs of Iraqi military operations, and invest in 21st century domestic infrastructure and priorities like education and job training, this is the wrong time to enact these costly tax breaks. Rather than divert more costly tax relief to a minority of Americans, the Committee should reduce the deficit by ending corporate tax abuses and repealing earlier tax breaks for millionaires. Just last week, the Senate voted to cut nearly $40 billion from mandatory spending on vital services amidst rhetoric about tight budgets and large deficits. It is ironic and disturbing that the Senate would move so quickly to advocate a $68.8 billion tax cut package that significantly increases future deficits. The Senate Finance Committee's package includes many tax breaks that are overly expensive, untimely, skewed to benefit the wealthiest Americans, unnecessary, or all of the above. For example, the proposal to extend the 15 percent tax rate on dividend income costs $10.9 billion and largely benefits the rich. Similarly, the proposal to retain the 15 percent tax rate on capital gains costs $803 million and like the dividend provision doesn't even take effect in 2009. According to the Internal Revenue Service's 2003 data on the distribution of the benefits from this capital gains tax cut, the top earning two percent of taxpayers — those with incomes above $200,000 — gain 80 percent of the benefits. In contrast, the bottom 70.7 percent of taxpayers with incomes under $50,000, gain only 3.2 percent of the benefits. This distribution simply does not reflect America's priorities. AFSCME recognizes that a small portion of the proposal provides hurricane disaster relief, and we know this assistance is of great importance to the Gulf Coast and affected communities. There are other helpful measures, including tuition deductions and savers credits. There are also several helpful revenue raisers, including measures to reduce corporate tax avoidance on foreign earnings and clarify the "economic substance" doctrine. However, these helpful measures are relatively few. We urge you to vote to oppose this tax plan.
Charles M. Loveless |
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