Hope you don't mind if I share this with you... today
I sat down and did some calculations and found that tax cuts come with
hidden costs!
Federal tax cuts = less revenue = higher state and
local taxes and less money for helpful programs.
Here's one specific example pertinent to me. Since
2001, tuition hikes at Iowa State University have skyrocketed due to
drastic cuts in state appropriations [1]. This is a national trend
according to the Chronicle of Higher Education: "tuition at
four-year public colleges surged at its highest rate in three decades in
2003-4, rising 14 percent over the previous year" [2].
What does this mean in dollars and cents to a grad
student at ISU? Well, I personally got a $300 check as a result of the
2001 tax relief. According to the Quicken Turbo Tax 2003 Tax Relief
Estimator [3], I will save $50 in federal income taxes due to the 2003
tax cut (in my tax bracket my tax rate went down from 15% to 15%).
That's $350 in my pocket! Whoohoo!
Except that my tuition increases (over and above
previous yearly increases) since the Bush tax cuts amount to around
$1,066 [4]. That's $716 more than my tax break. And this is only
accounting for ONE direct consequence of the cuts! (Indirect costs to me
at ISU include larger class sizes, fewer classes offered, decreased
Health Center hours, increased health insurance deductibles, and
department cutbacks on things like journal subscriptions and elevator
repairs.)
Moral of the story: When your tax refund check comes
in the mail, consider a cautious HURRAH for tax relief. Even if you get
a lot more than $350 back, it's possible you are paying for it with other
hidden costs (increased state/and local taxes/fees, rising national debt,
rising interest rates, rising health insurance premiums and co-pay, the
unraveling of social security, Medicare, and government pensions, decline
of K-12 education, redistribution of wealth to the top 1%) too!
[1] http://www.iastate.edu/~president/speeches/03/hepi.shtml
[2] “Public-College Tuition Rise Is Largest in
3 Decades” in the October 31, 2003, issue
of The Chronicle of Higher Education.
[3] http://www.turbotax.com/calculators/lawchange/notemplates/
[4] I calculated my approximate extra tuition increase
as follows: Here are the tuition increases I experienced as a grad
student at ISU before Bush cut taxes (information obtainable from the ISU
website):
Between the 1996-97 and 1997-98 school years there was
a 3.89% tuition increase. From 1997-98 to 1998-99 the increase was
3.87%, from 1998-99 to 1999-00 it was 4.49%, and from 1999-00 to 2000-01
it was 4.35%.
After the Bush tax cuts:
Between the 2000-01 and 2001-02 school years the
tuition went up 7.24%. From 2001-02 to 2002-03 it went up 18.53%, and
from 2002-03 to 2003-04 it went up 14.81%.
I subtracted 4.5% from the latter set of values, to
account for the tuition increase trend before the tax cuts, and used the
remaining percentage increase each year to calculate the extra dollar
amount of tuition increases after the tax cuts for that year. For
example: 18.53 - 4.5 = 14.03% and .1403 x $3702 (the tuition being
increased) = $519.39 for 2002-03 (the increase over and above previously
typical increases).