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Letter to Representatives opposing the conference agreement on the Budget Reconciliation $70 billion tax package (H.R. 4297)

May 11, 2006

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 conference agreement on the Budget Reconciliation $70 billion tax package (H.R. 4297).

AFSCME opposes this costly package of tax breaks for a number of reasons. First, it is unbelievable that congressional leaders would force a vote on more tax breaks so soon after voting for Congress' Reconciliation budget package, "The Deficit Reduction Act of 2005", which cut almost $40 billion from vital public services and harmed working families. Second, this conference agreement adds dramatically to the federal deficit and instead of costing $70 billion over five years, the true cost especially when added to other tax breaks would add dramatically to the federal deficit. Moreover, it appears that a number of gimmicks were used to stay within the $70 billion limit, such as a timing shift and use of retirement savings provisions which appear to save money in the short run but actually cost more in the out years. This tax vote also comes amidst negotiations on the FY07 Budget Resolution in which some members already cite large federal deficits as their excuse to further cut the overall budget and to cut investments in education, healthcare, and job training.

In addition, it is simply outrageous to give away $20 billion of tax breaks for dividend and capital gains income, which are not necessary and which overwhelmingly benefit millionaires and the wealthiest Americans. Under this deal, middle-income households would get an average tax cut of just $20 according to the Urban Institute-Brookings Institution Tax Policy Center, while the wealthiest households in the country, those with incomes over $1 million, would get average tax cuts of $42,000. AFSCME opposes tax breaks that are skewed to the rich at others' expense. Supporters claim it is needed to help the economy, but there is little evidence to back this up. This tax break for dividends and capital gains is a windfall for the rich and it is unnecessary, untimely, and too costly.

We strongly urge you to vote to oppose this unfair tax package.

Sincerely,

Charles M. Loveless
Director of Legislation

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