Benefits of Bush tax cut questioned.

Byline: SHERRI BURI McDONALD The Register-Guard

The Bush administration's tax cut proposal would give no relief to 511,000 Oregon households - almost a third of all households in the state, according to a study released Monday by the Citizens for Tax Justice, a nonprofit research and advocacy group in Washington, D.C.

Bush's plan offers no benefit to 30 percent of all Oregon households, and 50 percent of Oregon households would receive a tax cut of less than $100, the study said.

Those results track closely the nationwide averages reported in the study.

The benefit to most Americans is slim because Bush's plan centers on exempting dividends from stocks. But 80 percent of Americans don't directly own stocks, and their incomes are too low to trigger federal tax liability, the researchers said.

So, a large number of Americans will receive no tax reduction but can count on cuts in services when tax revenues fall short, said Jeff Thompson of Oregon Center for Public Policy, a research group based in Silverton.

"Since the Bush tax cut will lead to reduced spending on health care, education and other popular programs in the future, these families won't just be left out, they will be worse off," Thompson said.

A recent analysis by the Center on Budget and Policy Priorities, a research group based in Washington, D.C., estimated that the Bush tax cuts would reduce Oregon state government revenues by more than $90 million each year.

Bush this evening in his State of Union speech will seek to persuade skeptical lawmakers and voters to support his 10-year plan to cut taxes by $670 billion.

The speech offers Bush his best chance to counter opposition to an economic plan that Democrats say won't work and will deepen deficits. `If he fails to make a persuasive case on ... his stimulus plan, you can expect to see his popularity, which has been declining, continue to fall,' University of Virginia professor Larry Sabato said.

Bush has touted his plan as offering an "average" benefit to taxpayers of $1,083, but 80 percent of taxpayers will receive considerably less than that, the researchers found. The typical taxpayer nationwide would receive a tax cut of $289 in 2003, the study said. The average benefit figure is so high because of the generous tax cuts that would go to affluent households, Citizens for Tax Justice said.

The plan's centerpiece, exempting dividends, delivers 49 percent of its benefit to the top 1 percent of taxpayers nationally, the group said. The entire package gives 32 percent of the benefit to the top one percent, the group said. The bottom 60 percent of taxpayers nationally receive just 8.5 percent of the total tax cut, the group said. The average tax cut for the bottom 60 percent of taxpayers is $131 in 2003, compared with $30,127 for the top one percent of taxpayers, the study found.

For more information, go to the Oregon Center for Public Policy Web site at www.ocpp.org, or the Citizens for Tax Justice Web site at www.ctj.org.

Polls show public support for Bush, while high by historical standards, has slid to its lowest level since the Sept. 11, 2001, terrorist attacks amid concerns about a sluggish economy. The Standard & Poor's index of 500 stocks has dropped 23 percent since Bush's last State of the Union address.

Bush spokesman Ari Fleischer said the president will use the bulk of his address tonight to talk about the economy and health care.

Democrats have offered alternative tax-cut and economic stimulus plans. They have criticized the president's proposal as tilted toward wealthy taxpayers and say it threatens to widen federal budget deficits without giving an immediate boost to the economy.

Bush has an uphill fight, polls show. A CBS News-New York Times survey published Friday found almost half of the 997 people surveyed disapprove of Bush's handling of the economy.

Half don't think eliminating the tax on stock dividends will boost the economy. Cutting the federal deficit, estimated to be $300 billion for the current fiscal year, would do more to help than another tax cut, half of those polled said.

Bloomberg News contributed to this report.