Howard Dean on Tax Reform
Former VT Governor; Former Democratic Candidate for President
A: I plan to roll back all of George W. Bush’s reckless tax cuts so we can pay for health care reform and balance the budget. Then I will introduce real tax reform to make the tax code fairer and simpler for working families. We’ll ensure that corporations and wealthy Americans pay their fair share, close loopholes and end the corporate welfare that has left middle class Americans footing the country’s tax bill.
There was no middle-class tax cut in this country. Somebody has to stand up and say, we cannot have everything. We can’t have tax cuts, pay for health care, pay for No Child Left Behind and pay for an adequate defense. I believe we ought to have balanced budgets. I’ve done it 12 times. That is the real issue in this campaign. The future health of this country depends on a balanced budget. We’ve got to start telling the truth and stop making promises.
DEAN: The first priority is balancing the budget. What we will do is lay out a plan to balance the budget and include some sort of plan to increase corporate taxes, just as Lieberman has suggested, because corporate taxes are now at the lowest level since 1934, which means the rest of us are paying the rest of the tax burden and that’s not fair.
KUCINICH: Dean takes the position that he’s going to balance the budget, but he said repeatedly that he won’t touch Pentagon spending. Half the discretionary budget of the US goes for the Pentagon. The solution is get out of Iraq, cut the bloated Pentagon budget by 15%, and stop the tax cuts that are going to the wealthy.
DEAN: There are an enormous number of needs in defense that aren’t getting met: special operations, an anti-terrorist task force, human intelligence; cyber intelligence; soldiers aren’t paid properly. What I will do is leave the Pentagon budget alone.
A: Cutting payroll taxes is not a bad idea. It’s certainly something we’re going to look at. Under no circumstances will we take the money to cut payroll taxes out of the Social Security trust fund. That would be absurd. If we end up cutting payroll taxes, which is the most regressive tax there is for low- and moderate-income workers, it will come out of the general fund in the form of a tax credit. We will not touch Social Security.
The Bush tax cut amounts to $2,015 in 2005 for a family with an income between $73,000 to $145,000. Thus, the Dean plan would effectively increase taxes on that family by $2,015 in the first year of a Dean presidency if he immediately repealed all the cuts. Dean has contended that the Bush cuts don’t significantly help most Americans, pointing out that the Bush tax cuts save $112,000 for millionaires, but for 60% of Americans save an average of only $304.
The question now, Dean advisers said, is exactly what form the tax relief proposal might take. It is most likely to be a targeted income-tax reduction for families with children, they said.
DEAN: If you make over $1 million, you’ve got a $112,000 tax cut. 60% of us got a $304 tax cut .
FACTCHECK: Actually, half of all US households got MORE than $470 according to the Tax Policy Center. Dean arrives at his figure by averaging in the cuts received by the bottom 60% of households, which includes all those who paid no taxes in the first place and thus got no cut. But that’s just as misleading as averaging in the cuts received by the TOP 60%, which produces a figure of $1,948. By Dean’s logic, President Bush could claim that 60% of us got nearly $2,000 and he’d be just as correct as Dean. Which is to say, not very.
DEAN CAMPAIGN: Factcheck’s objection is that the Governor did not say explicitly that he was referring to the bottom 60%, rather than the top 60%. The Governor is contrasting the huge tax break for the wealthy with the relatively small average cut for most Americans.
DEAN: Bush has given tax cuts to people who make $1 million a year of $112,000. Sixty percent of us got $325.
FACTCHECK: But that’s still way too low. In fact, most American households got substantially more than $325 this year from the Bush tax cuts. The median tax cut for 2003 is actually $470, according to a calculation done by the nonpartisan Tax Policy Center (including 25% who are getting nothing because they earn too little to pay taxes). Dean aides insist his $325 figure is valid. They calculated that the average tax cut received by the lowest-earning 60% of American households was $305. That’s correct, but hold on. Using Dean’s logic, Bush would be justified in claiming that 60% got $1,948. Either figure gives a warped idea of reality
DEAN: I’m a strong supporter of Medicare. The rest of our Social Security is not on the table. I’m a strong supporter of Social Security. What you need to do is get rid of every dime of the Bush tax cuts. Some say we should keep the middle-class tax cuts. What middle-class tax cuts? On the average, 60 percent of the people in this country got a $304 tax cut. One percent, which are rapidly writing $2,000 checks to George Bush, got a $26,300 tax cut.
KERRY: When Dean said, “What middle-class tax cut,” let me tell him. The Burnett family earned $70,000. But under his plan, they are going to pay $2,178 more in taxes because they lose the child credit, they pay a penalty for being married again because he puts it back, and they lose the 10 percent bracket. Those aren’t Bush cuts, those are the Democrat cuts that we worked hard to put in place to protect the middle class.
"The bottom line is this," he says. "What Democrats can't afford to do is what Democrats have done in the past, promise everything to everybody. So I guess my retort is, if you're not in favor of getting rid of all the Bush tax cuts, tell me what you don't want to do. But don't go and tell us you're going to balance the budget, promise them everything, because people don't believe that from politicians anymore."
At the same time, Dean argues that keeping the budget in balance will lead to stronger economic growth, hence more and better jobs. "Most Americans would be happy to pay the taxes they paid under Bill Clinton if they could have the kind of economy they had under Bill Clinton," he says repeatedly.
KERRY: We Democrats fought hard to put those tax cuts in place. Those represent trying to reach the middle class of America. I think Governor Dean is absolutely wrong. And he’s wrong on his facts. The fact is that 32 million American couples get about $1,000 out of the tax cut. The fact is that 16 million American families get $1,500 to $3,000 from it.
DEAN: With all due respect to Senator Kerry that voted for these tax cuts, this is exactly why the budget is so far out of balance. The fact of the matter is that 60% of Americans at the bottom got $325. That is not a tax cut. Tell the truth: We cannot afford all of the tax cuts, [all the programs we want], and balancing the budget. Let’s call this one right. Let’s be fiscally responsible and balance the budget.
We need to repeal the Bush tax cuts, all of them. We aren’t going to just go out and say we should just repeal the President’s tax cuts, because if we do people are going to say “No.” What we’re going to do is respect the voters for a change and say, “would you rather have the President’s tax cuts, or would you prefer health insurance for every man, woman, and child? Or to fully fund Special Education? Or would you rather invest in infrastructure and balance the budget so we can have jobs in this country again?” I think that most Americans are going to say, “I’ll take jobs, health care, and education because I didn’t get the President’s tax cut.”
This president has passed the largest tax cut in American history. He’s given $1.7 trillion to his corporate friends like Ken Lay, and added $10,000 worth of debt to every child in America. We can do better than that.
The tax cuts (with some exceptions in the estate and retirement areas) should be repealed. Otherwise it is irresponsible to discuss a Medicare pharmacy benefit, money for education, better roads and rail systems, or stronger environmental protection. Those all cost money.
Ask most Americans if they would rather have a tax cut or better health coverage, roads and bridges, and schools for their children, they will choose the latter. They also understand-despite hollow Republican promises-that we cannot do both. The budget must be balanced; we must build the Social Security Trust Fund; and we must invest in Health and Education once again.
We are writing to request equal treatment between states and the federal government on estate tax changes. Regardless of one’s view about phasing out the federal estate tax, the Governors are absolutely united in opposing any action that would discriminate against states in the phase-out of the state and federal estate taxes. This issue needs to be addressed before the Senate goes to conference with the House.
Governors believe that the ability of states to independently determine their own tax revenue policy is a basic tenet of federalism. Moreover, no federal tax bill should be enacted without close consultation with the states.
At the very least, there must be equity in the treatment of the state death tax credit in the tax bill the Congress considers with the proposed phase-out of the federal estate tax. Governors oppose provisions that impose disproportionate impacts on state revenue systems. The changes proposed by the Senate would have abrupt, significant adverse impacts on state revenues at a particularly onerous time for many states. The potential impact on states would begin next year and have a potential impact of between $50 and $100 billion over the next ten years.
We urge the leaders to respect those rights and to restore fairness.
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George W. Bush (R,2001-2009)
Bill Clinton (D,1993-2001)
George Bush Sr. (R,1989-1993)
Ronald Reagan (R,1981-1989)
Jimmy Carter (D,1977-1981)
Gerald Ford (R,1974-1977)
Richard Nixon (R,1969-1974)
Lyndon Johnson (D,1963-1969)
John F. Kennedy (D,1961-1963)