No tax cuts for the wealthy

Because tax policy is essentially an ethical issue of fairness and justice in the distribution of community resources, the Maine Council of Churches has monitored the debate over the state budget cuts, and more recently the Bush administration’s proposed tax cuts. Taxes are the “membership dues” for living in a caring, moral society, the imperfect means by which we attempt to distribute our common wealth fairly and compassionately to provide for the educational, health and safety needs of all our people and for the common good.

Though taxes can also be legitimately used to stimulate the economy, we are deeply troubled by the moral implications of the Bush administration’s proposal to cut taxes for the wealthy, while simultaneously cutting support services for the needy.

Congress is currently debating the administration’s massive “economic stimulus” tax cut proposal that would grant two thirds of the tax cuts to the wealthiest 2 percent of the population. Many in Maine find this disparity in the allocation of the tax breaks an affront to the basic notion of American fairness. It also contradicts the well-established concept of a graduated, progressive tax system that recognizes the moral obligation of those who are wealthier to assume a greater portion of the responsibility for our common welfare.

The assumption of the Bush tax plan is that the money saved by the proposed tax cuts will be reinvested in the American economy thus stimulating economic growth and creating new jobs. We challenge this assumption as unrealistic at best and dishonest at worst. Based on our understanding of the failure of this “trickle down” approach in the past, and our observations of current economic trends in Maine, tax breaks for the wealthy, no matter how big or small, will not be reinvested in a way that will help the average worker in Maine. We assume this to be true because during the past two decades Maine, as almost every other state, has experienced a steady exodus of capital support for traditional industries, in spite of our highly regarded work force. Maine no longer manufactures shoes; the paper industry is in serious trouble; and even the well-established Hathaway shirt plant has closed.

Common sense suggests that when the wealthiest recipients of tax breaks reinvest their money, they will likely do so through Wall Street investment portfolios that promise the most profitable return, most likely offshore where cheap labor assures maximum profit, not in economically struggling Maine.

A more likely stimulus to economic recovery in Maine would be low interest investment in small businesses, in affordable housing for ordinary citizens, in providing a health care program for everyone, in supporting a livable wage, and in maintaining the integrity of our public, social and economic infrastructure.

Federal tax cuts to the wealthy also mean fewer dollars for programs that serve the common people of Maine. The Center for Budget and Policy Priorities estimates that the Bush tax cuts would remove $8 billion from all State revenues during the 2003-2004 tax year, $88 million from Maine alone. Serious reductions to social programs have already been made – veterans’ benefits, educational programs, housing subsidies, health care support, foster care, and nutritional care for children among others – and more are predicted in years to come.

In spite of the dubious claim to (eventually) improve the lives of Maine people, the more likely scenario of the Bush “economic stimulus” proposal is that many ordinary people will suffer from unemployment and job insecurity, the ominous growing disparity between the rich and poor will accelerate, and our nation essentially will seriously erode our moral commitment to help the poor and needy.

We laud our own Sen. Olympia Snowe for courageously and successfully challenging the president’s original tax break proposal, but we question the appropriateness of any tax cuts for the wealthy at this time. Fortunately, there seems to be growing skepticism in Congress regarding the false promises of the tax cuts and their negative impact. We can only hope this trend will take hold.

Based on the practical and moral concerns noted above, we recommend that there be no tax cuts to the wealthy. Instead, we urge Congress to allocate funds directly to the states for economic development projects that create jobs and help meet moral obligations to help those in need.

We encourage further discussion and clarification on this matter and invite responses to our opinions through our e-mail at info@mainecouncilofchurches.org.

Tom Ewell is executive director of the Maine Council of Churches.