While the superwealthy in general benefit from loopholes established for them in tax laws, and have a myriad of ways of shielding income and wealth from taxation, some at least start out reporting income to the IRS.

What is fact and what is fiction?

Fiction: White House spokesperson: "The president's plan is aimed at helping people disproportionately in the lower brackets. On the whole this plan is targeted toward working families."

Fact: Internal Revenue Service figures show Bush's plan provides the greatest benefits to the wealthiest U.S. citizens, according to Joel Slemrod, a tax specialist at the University of Michigan (setting aside the strange notion that the government is "helping" workers by "giving back" taxes they should never have paid in the first place).

Fiction: There is no longer a superwealthy ruling class or a small number of families that run America.

Fact: There are 400 "top income earners" in the United States. Each hauls in at least $110 million a year in income. (If this was earned from wages for 50 weeks at 40 hours, these people would be making $55,000 an hour. But of course the people who rule America don't work for a living! And that yearly income is a pittance compared to their accumulated wealth and what flows into their trusts, bank and corporate coffers, and foundations.)

Fact: Each of the top 400--called the "extraordinarily wealthy" not just the "merely wealthy and the affluent" by the New York Times--will receive a tax break of some $1.14 million a year! Just who's helping who here?

Fact: The 400 comprise the top of the top 1 percent of "income earners," a category that includes 1.25 million people who make more than $373,000 a year (making only $186 an hour if in wages). The yearly tax savings for these "merely wealthy" drops to $2,430 under the president's tax plan.

Fact (according to the Times): "Under the tax cut plans now moving through Congress, the tax breaks for the wealthiest Americans gain value over time while most of the breaks for everyone else lose value, according to both supporters and critics of these plans."

Fiction: Republican Bush is the one who is helping out the rich. The Democrats would never go this far.

Fact: IRS figures show that for the 400 extraordinarily wealthy people that the new tax law's "help" is on top of an average savings of $6.4 million from a 1998 cut in tax rates on long-term capital gains, which was approved by the Clinton administration.

Fact: From 1992 to 1998 the after-tax incomes of the top 1 percent jumped 47 percent, while the bottom 95 percent of U.S. citizens (the rest of us) saw income rise only 8 percent after taxes.

Fact: Poorer sections of the working class--what the Times calls the "bottom 20 percent" income group who earn under $15,000 (about 25 million of us), will receive a paltry savings of about $50, if anything at all. Fifty bucks.

Fact: Some 80 percent of working people in the United States today shell out more in payroll taxes--Social Security and Medicare deductions--than they do for income taxes. Corporate and individual income tax was first authorized in 1913, from which working people were exempt until the beginning of World War II.

The Senate Finance Committee approved the $1.35 billion tax cut plan May 15, which includes lower top tax rates sought by the Bush administration. The legislation is expected to be signed into law by May 25. Congress is also set to pass legislation that would eliminate inheritance taxes under a plan promoted by Bush that allows wealthy individuals to leave $1.3 million to $3 million to heirs and surviving spouses, tax free.

It's not over yet. Encouraged by these developments, U.S. treasury secretary Paul O'Neill, former chairman and CEO of Alcoa Aluminum Corporation, just came out with something that's obviously been on his mind for a long time. He told the Financial Times that corporate income tax and capital gains tax on businesses should be abolished. The tax system is an "abomination," he told the paper, and would work better if the government "collected taxes in a more direct way from the people who were paying the taxes." (He also said in the interview that anyone who is still able to work should be denied a Social Security pension or medical coverage by the government.) "Not only am I committed to working on this issue," he added, but "the president is also intrigued about the possibility of fixing this mess."

O'Neill, like other wealthy cabinet members, took a temporary hit when joining the administration when he had to unload massive quantities of stocks and other assets all at once. O'Neill, who acquired some $117 million before taxes in stock and options with the aluminum company, couldn't find enough loopholes and deductions when he had to sell the stocks and ended up having to pay $24 million in taxes this year, according to the Washington Post. No wonder he's fuming about the "mess" of tax laws.  
 
 
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