0 OPINION Page 4 Thursday, October 12,1989 The Michigan DailyM &be Lkbigui &dlQ Edited and managed by students at The University of Michigan 420 Maynard St. Vol. C, No. 27 Ann Arbor, MI 48109 Unsigned editorials represent a majority of the Daily's Editorial Board. All other cartoons, signed articles, and letters do not necessarily represent the opinion of the Daily. Capital gains for who.? The real war on drugs THE NEW capital gains tax reduction, supported by the House (239-190), and likely to pass in the Senate, will further widen the gap between the wealthy and the poor in this country, a gap that has been growing since the beginning of the Reagan administra- tion. This is the third tax reform in eight years, following the 1981 and 1986 packages. Unlike the previous two, this tax reform bill is not described by its supporters as one which benefits the middle class. The mood of the nation today allows politicians to unabashedly admit that the top 1.1 percent of U.S. taxpayers - those with annual in- comes of $100,000 or more - will receive 80 percent of the benefit from this bill. 60 percent of the benefit will go to less than 1/5 of 1 percent of U.S. citizens, those with taxable incomes of over $200,000 per year. In other words, of the 150 million taxpayers in the country, only 300,000 will benefit - from this bill. What capital gains are Remember, taxable income differs from gross pay; it is the amount of money earned after deductions are taken. Households with taxable in- comes of $200,000 earn a total income of $300,000 or more. According to Congress' Joint Committee on Taxation, this new capital gains tax cut will provide the richest 375,000 tax- payers in the U.S. an average of $25,000 each per year. This benefit is higher than the median annual income in the U.S.- $23,450 in 1986 dollars. Capital gains include profits from the sale of stocks, bonds, property, and other assets, including - due to its successful industry lobby - timber. The reduction completely excludes from taxation 30 percent of the profit from the sale of assets. Remaining capital gains, taxed at a rate of 28 per- cent, bring the effective maximum tax on capital gains to 19.6 percent. . - The 1986 Tax Reform Act This reduction undermines the 1986 Tax Reform Act, that so-called monu- mental piece of legislation which re- duced the tax rate for the very wealthy. The Reagan years saw this maximum drop from 70 to 28 percent, and the capital gains tax fall to 33 percent. The 1986 tax measure, which eliminated tax loopholes and shelters, was suppos- edly designed to increase the overall federal tax paid by the wealthiest fifth of the U.S. population. Bush objected to the 1986 measure from the very first. Promoting a ver- sion of trickle-down economics, he ar- gued that low taxes for the rich would ultimately increase tax revenues by en- couraging capital reinvestment and promoting jobs. But evidence to sup- port such theories remains scanty at best. While initially the tax reduction may increase revenues by encouraging people to sell, even Reagan's own trea- -sury department, in a 1985 study on the long-term consequences of cutting 1 capital gains, concluded that so-called stimulating economic effects "could not be detected in any statistical compari- son...of the economy before and after" (Detroit Free Press 9/29/89). In fact, the economic success of western European countries - such as West Germany and Sweden - sug- gests just the opposite. The combina- tion of high income tax and low interest rates promotes economic reinvestment. Providing little benefit to the greedy, such rates discourage people from hoarding their profit, and instead oromot them to reinvest in the econ- Issue is political Republican leaders claim that the de- bate about the cut concerns not so much tax policy but political philoso- phy. Yet, the two are inextricably con- nected. Whether or not one believes that the wealthy should pay a higher share of taxes than the middle and working classes depends absolutely on the social strata politicians hope to sup- port. House Republican leader Bob Michel of Illinois argues that while the "Democratic Party believes in the re- distribution of wealth, the Republican Party believes in creating wealth." That a politician can baldly state his bias to- ward the wealthy without fearing a loss of votes reveals a shift in the political climate over the past ten years. Even the recently defeated Democratic party alternative to the new capital gains reduction falls short of the goal to further equalize income and re- duce the gap between the richest and pooret members of this nation. That plan would have raised taxes on the wealthiest 600,000 taxpayers, but only from 28 percent to 33 percent, still far below the previous 70 percent rating. In addition, the plan would have pro- vided tax breaks for individual retire- ment accounts, accounts held largely by the wealthiest fifth of the nation. Though the Democratic plan was touted as one that would aid middle income workers, it- like its Republican counterpart- would not have substan- tially eased the tax burden for the ma- jority of U.S. citizens. Shrinking middle class Confusion surrounding the term "middle class" provides politicians seeking to help the wealthy an easy cover for their projects: For instance, Reagan pushed the 1981 Federal Tax Reform measure as one that helped those solidly middle class households earning annual incomes of $50,000. But such an income level is not middle class; it is wealthy. In 1981, only slightly more than 5 percent of all fam- ilies had annual incomes equal to or greater than $50,000. While the house- holds in the top fifth income level saved, on average, $2439 annually be- cause of the reform, those in the lowest fifth saved less than $3 each. Since 1978, the U.S. middle class has been shrinking. Though most families in this country describe them- selves as middle-class, statistics reveal that those earning a middle income level - $19,000 to $47,000 a year, a large income range - have decreased by 8 percent in the past decade. Two- thirds of those leaving the middle class fell in income level, and one-third of them rose to upper-class status. There are several reasons for this shift, including cuts in social pro- grams, financial aid, unemployment in- surance and social security and welfare subsidies. The new capital gains cut will simply exacerbate this trend. As described in a New York Times edito- rial the plan is wrong. Profoundly wrong. This country needs to stop giving tax breaks to the wealthy at the expense of the poor. If this nation is to live up to its democratic ideals, it needs a fair tax plan, one which requires the rich to pay their share to support pro- grams needed by the majority of U.S. citizens. No member of this country should make millions, or even billions , of dollars, while others go hungry. It is time that the middle and working classes demand an end to such inequities. Last weekend's Housing Now march on Washington was a good way to initiate this demand, and it is important that the almost 99 percent of the nation who will not benefit from tiei tax haruain Fr thba o a tk-an By Solidarity As Nicaragua prepares for open elec- tions, El Salvador's FMLN initiates peace talks with the ARENA government, Cuba criticizes Soviet perestroika, and Mr. Baker and Mr. Shevardnadze warm to each other's company, the real "threat" which confronts Washington's policy makers is to find a new way of justifying U.S. in- tervention in Latin America to an increas- ingly dubious U.S. public. Because the "spectre of communism" is no longer convincing as "a national security risk," the Bush Administration has decided to serve up the war on drugs as the new altar at which Latin Americans' rights to self- determination and economic interdepen- dence can be sacrificed. Bush's new moral crusade is especially tragic - and outrageous -because drugs, unlike the invoked threat of communist invasion, lie at the crux of an array of very real and legitimate social, economic, and political ills afflicting both this country and Latin America. The serious nature of the drug problem underscores the cynical nature of Bush's "drug war" which will ac- tually serve to exacerbate the very crisis it pretends to address. Washington cannot claim a serious interest in eradicating a drug economy if the aid it provides focuses more on fighting leftist insurgencies in the region than on tackling the same re- gion's devastated economies and aiding its impoverished peoples. Columbia, Peru, and Bolivia form the centerpiece to Latin American drug traf- ficking; Peru and Bolivia grow the cocaine that Columbia refines. All three countries are economically dependent on the drug trade, thanks to their longstanding reliance on export cash crops - a dependence rig- orously enjoined upon them for over a century by the United Sates and its allies in the World Bank and International Monetary Fund (IMF). All three have dis- couraged countries like Peru from institut- ing import-substitution programs through which they might have fostered local in- dustry and achieved a modicum of indepen- dence. Consequently, Latin America is perpet- ually held hostage by the arbitrary fluctua- tions in world commodity prices. Throughout the 1980s, the region has been earning less and less from its ex- ports, both in terms of their prices on world markets and in terms of what their sales can buy in Western manufactures. At the beginning of 1987, commodity prices were lower compared to the price of manu- factured goods than at any time since World War II. To make matters worse, the supposedly "free market" U.S. imposes strict quotas on many of the area's products, such as cut flowers and sugar. And the recent U.S. decision to unilaterally abrogate a 74 na- tion coffee agreement will cost Colombia alone $500 million dollars - far more than the $100 million Bush provided Bogota for the "drug war." Is it surprising, in this context, that Andean farmers struggling just to survive are converting to lucrative cocoa produc- tion? Or that 300,000 people depend on cocoa production in Bolivia, where the close to half billion dollars that enters the country in drug profits rivals the $600 million in legal trade? Should we wonder that next door Peru makes between $700 million and $1.2 billion per year on drugs, compared to legal exports of $2.5 billion and that more drug money enters Colombia ($2.5 billion) than the country makes from the sales of its largest export, against suspected supporters of the Sendero Luminoso guerrilla movement are one of the main reasons that Peru last yeari enjoyed the dubious honor of leading the world in political murders and disappear- ances. The U.S. State Department, which tips its hand when it states "there is no way to handle the problem of cocoa unless the problem of Sendero is handled as well," disregards the ramifications of U.S. partic- ipation in such military maneuvers. Those ramifications are complex. In Colombia the neo-fascist Morena party - virulently anti-communist and pro-capitalist - brings together drug barons and peasants on a strong anti-United States platform. In Bolivia last June, a government drug raid - carried out with U.S. assistance - failed to seize a drug king pin when local residents aligned themselves against gov- ernment forces. And in Peru, U.S. inter- vention on the side of a brutal government has contributed to a growing link between Sandero, the drug mafia, and cocoa grow-* ers. In all three countries, the consequences of U.S. intervention have caused an in- crease in economically impoverished peas- ants, cocoa growers, right-wing death death squads, economic dependency and ris- ing spirals of violence. For these reasons alone, Bush's policy must be vigorously 'The serious nature of the drug problem underscores the cynical nature of Bush's "drug war" which will actually serve to exacerbate the very crisis it pretends to address.' coffee ($1.8 billion)? Or, should we not wonder instead - since U.S. economic policy is largely responsible for this situa- tion in the first place - what all those dollars Bush is shipping south are really for? In Peru, for example, miners have launched five major strikes this year. Other strikes have involved the National Health Service doctors, oil workers, elec- trical workers, the administrative staff of the state universities, the teacher's federa- tion, and the peasant confederation. Peruvian police broke up a meeting of the latter in February by killing 8; 18 are re- ported missing. And government atrocities debated, challenged, and resisted. Latin American peoples must be free to con- struct economic and political movements independent of the U.S. drug industry and U.S. power. And U.S. residents deserve an honest war on drugs - one which will provide education, health care, and eco-g nomic justice rather than rhetoric, dirty wars, and the ongoing oppression of peo- ples of color throughout the Americas, at home and abroad. Solidarity is an independent socialist or- ganization committed to building a non- secretarian, activist-oriented left in the United States. It happens all the time 6 By Tom Abowd The Moscobiyya in West Jerusalem has become notorious as a center of torture and interrogation. Within the walls of the center Israeli authorities regularly beat, humiliate, and even kill Palestinian pris- oners who they feel are "security threats" to the State of Israel. Today Palestinian Dr. Riad Malki, activist, intellectual, community leader, and human rights advo- cate is detained without charge in the Moscobiyya. His arrest came shortly be- fore he was scheduled to meet with foreign consuls at a press conference in Jerusalem concerning Israel's recent repressive mea- sures taken against the inhabitants of the Palestinian village of Beit Sahour. Dr. Malki is a professor at Bir Zeit University in the West Bank. His only crimes are his continual efforts tO expose the brutality which the Israeli Defense Forces perpetrate daily against his people and to seek an end to the military occupa- tion of his homeland. He has written nu- merous articles about the soc . ecnomic conditions of the Palestinian v on n the occupied territories and has done exten- sive research on the expropriation of Palestinian goods and products by the Is- raeli authorities. He has also been active in monitoring human rights abuses in Palestine. According to eyewitnesses, the details of his arrest are as follows: At 7:30 a.m on Tuesday October 3, the Civil Administra- tion of the West Bank called Dr. Malki, and requested his presence at the Military Government Building in Ramallah. Upon arrival he was handcuffed, arrested, and in- terrogated. The military interrogators then took him back to his house where they searched his room. They then left in the jeep with Dr. Malki, telling his mother to "say goodbye to your son, and then get him a lawyer." Like Dr. Malki, Palestinian leaders par- ticularly active in the str *gle for self-d- termination and statehood often find them- selves in Israeli prisons for months, some- times years, often without charge or trial. Riad has participated in international con- ferences throughout the c.rld w is m- vited by the (' R.bo alitkon to address their seminar in Atlanta during the Democratic National Convention in July,1988. He has been active in organiz- ing fact-finding missions to occupied Palestine and has spoken before the United Nations. Riad's fate can not be known at this point. To date, there is no news of his condition and his lawyer is forbidden from visiting him. Urgent action is necessary to win the release of Dr. Malki. Israeli measures to limit Palestinian freedom of expression necessitates an unwavering show of support by those in this country who appreciate such rights. All those interested in helping with the campaign to free Dr. Malki are urged to send a telex to: Yitzak Rabin, Minister of Defense, Israeli Defense Ministry Telex Number; 371434 MOD IL. The text of the telex is suggested as follows: STRONGLY DEPLORE DETENTION OF DR. RIAD MALKI, FACULTY MEMBER BIR ZEIT UNIVERSITY. WE URGE HIS IMMEDIATE RELEASE. \ i;e At .ti. _ 1 i. t iK o ,w. s:. >+ '.' _ 7 F e }'_ ". f" i. j , -., > °-- .. r ///""" d -_ l ' ., ,, - :. ; Ott ',i ', ('.L '. E. i '. .. Y. to R d' '. . 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