Rich Dodge Taxes Says Bush – A Flash of Honesty or Another Slip of the Tongue?

By Lucy Komisar,
Pacific News Service, Sept 9, 2004

When none other than President George W. Bush announces that the real rich dodge taxes, is that an inadvertent flash of honesty about the shady secrets of offshore shell companies and tax shelters? The administration is tying itself up in knots to dodge the significance of his statement.

The real rich dodge taxes and small business owners pay the burden. Does that sound like a radical-liberal denunciation of privilege by candidate John Kerry?

Guess again. It‘s a pronouncement by President Bush.

Speaking at the Northern Virginia Community College in Anandale on August 9, Bush said, On the subject of taxes, just remember when you’re talk about, we’re just going to run up the taxes on a certain number of people, first of all, real rich people figure out how to dodge taxes, and the small business owners end up paying a lot of the burden of this taxation.

Wanting to delve into this further, I called up the White House Press Office. “Just how, according to the President, were the rich cheating on taxes?” I inquired. In my mind were the elaborate tax shelters designed by global accounting firms like KPMG. Or the offshore shell companies and bank accounts where the super-rich hide their profits. And “Why were small business owners picking up the slack?” I wanted to know. The White House didn‘t want to say.

So I brought the question to the Republican Convention at a press conference on Sept. 1 with featured speaker, Commerce Secretary Don Evans of Texas.

At question time, I repeated Bush‘s statement and asked Evans what the administration was doing to deal with the fact that, as President Bush says, real rich people figure out how to dodge taxes? The spin of his answer made me dizzy.

Evans declared that “there are many legal ways within the tax code, through charitable deductions and other kinds of opportunities, to reduce tax burdens on all individuals all across the country. And I’m sure what the President was very conscious of at that moment was the fact that grouping that often gets classified as among the rich, the lion’s share of them are small business owners across the country.”

Huh? How did tax-dodging by the rich turn into taking legal charitable deductions? And how did small business owners, whom Bush described as victims of rich people‘s tax evasion, get lumped with the tax-cheaters? Does Evans mean that the “real rich” run corner groceries or beauty salons?

The Secretary got even more tongue-tied as he plodded on: “…when you think about — and, again, you’re referring to the top tax bracket, is the tax bracket that you’re thinking about, the people that fall into that are so often — in fact, the majority of the savings by reducing it goes to small business owners, the real job creators of the country. And within the tax code, there are numerous ways through charitable contributions, it can reduce the tax burden somewhat.”

Catching up with the Secretary before he left the hall, I was desperate for clarification.

Komisar: The President wasn‘t talking about small business people getting taxable deductions for charities, he was saying – and the transcript is clear and on the White House website — that rich people, the very rich, find a way to dodge taxes, and therefore small business people pay more.

Evans: I haven‘t seen the speech and [don‘t] know the context in which that was said. I do know that under the President‘s tax cuts, those in the higher income brackets pay a greater percentage of taxes than those in the lower end of the income taxes.

I tried to get back on topic.

Komisar: What does he mean that they dodge taxes?

Evans: Again, I haven‘t seen the context. I would say, having not read any of that, is what I said earlier, the tax code does allow ways for people to give back to their country in other ways than just paying income taxes. They can make tax contributions that are all very legal, called 501(c)3s, and there are things like programs to eliminate breast cancer, programs to eliminate heart disease.

Komisar: What about tax shelters? You‘re talking about nickel-and-dime, the big money is in the tax shelters, in offshore secret banks accounts.

Evans was aghast: No, no, no! Offshore secret bank accounts! I don‘t know what you‘re talking about, offshore secret bank accounts! There are ways within our tax code legally and within the spirit of America and making this a better country, there are ways that our Congress has voted into law, signed by the President, that allow for them to have deductions that could possibly lower their effective tax rate. But even those are captured by the alternative minimum tax.

Is that what Bush meant? Not likely.

Komisar: He must mean something else.

Evans: Look, I wasn‘t there, I haven‘t read the text. I don‘t know the speech. Thank you.

And thank you, President Bush, for admitting the secret that we already know. Tax cuts for the rich are only part of the way you please big-money constituents. The real “tax break” is the wink at offshore tax evasion, at the Swiss and Cayman Islands bank accounts your corporate supporters enjoy.

As hotel magnate and tax-cheat Leona Helmsley said, “Only the little people pay taxes.” The real rich dodge them.

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