April 17, 1998 (Published in slightly modified form on April 25)

The Editor
The Hartford Courant

In her recent op-ed piece Representative Nancy Johnson, justifiably, bemoans the flaws in the current federal tax system then, unjustifiably, claims that last year's tax bill was an improvement.

Rep. Johnson cites the Taxpayer Relief Act of 1997 as contrasting with the tax bills of the past which "were used by Congress as vehicles for special interest tax breaks and corporate loopholes." Unfortunately, last year's tax bill fits in quite nicely with the tax bills of the past in this regard.

For starters, on tax returns filed this April, two-thirds of the benefits of the '97 tax act went to the richest one-percent of the population. They got an average tax cut of $7,135 while the lower income 80 percent of the population got an average cut of $6. Middle-income taxpayers will do a little better in future years, but even when the legislation is fully effective almost half of the tax cuts go to the best-off five percent.

Rep. Johnson is quite selective in describing last year's tax bill. She touts the $500 child credit, expanded Individual Retirement Accounts, tax credits for college education and lower taxes for small business. She doesn't mention a capital gains tax cut hugely tilted to the rich, the gutting of the corporate alternative minimum tax (a provision that had previously made sure large profitable companies pay at least some corporate income tax), cuts in the estate tax (the tax on transfers of wealth at death) that benefit only the most valuable two percent of all estates and dozens of other provisions targeted at even narrower special interests. Nor does she mention that we won't see the full $500 child credit until we're filing tax returns in the year 2000.

To top it off, Congress also made the tax system much more complicated. Anyone who had to file a Schedule D this year can tell you that. And it will get worse in years to come as all the special provisions become effective.

This isn't a new way of Congress making tax legislation, it's just the worst of the old way. The 1997 tax bill made the system more complicated and confusing, gave more tax breaks to special interests and cuts taxes for big business. Unfortunately, that's nothing new.

Sincerely,

Michael P. Ettlinger
Tax Policy Director
Citizens for Tax Justice