I was disappointed in the political tone of the article titled "Experts: Easing middle-class taxes won't help" by Ken Rankin (Accounting Today, July 23-Aug. 5, 2007, page 3).The experts quoted in the article uniformly expressed a right-wing point of view regarding an effort on the part of Democrats to reverse the Bush administration's tax cuts and thereby shift some of the tax burden off the middle class and on to the wealthy. I do not appreciate finding a political article in Accounting Today, particularly if there is no attempt to make the presentation balanced.

Any discussion of the allocation of the tax burden between the upper and middle classes addressing only one form of taxation - in this instance, the federal income tax - is misleading.

The tax burden of America's middle class is comprised of sales, property, FICA and Medicare taxes, as well as state and local income taxes, among others. Right-wing commentators, such as those featured in your article, narrow the focus to the federal income tax because their arguments that the middle class does not shoulder an unreasonable share of the tax burden could not be sustained if they included sales and other forms of taxation in their analyses.

Even if we limit the discussion to federal income taxes, their arguments do not withstand scrutiny. The Bush administration tax cuts primarily benefit the extremely wealthy - the top 0.1 percent of income earners who have $1.6 million or more in income - with only nominal benefits for the middle and lower classes. The upper middle class, those with earned income subject to FICA and perhaps subject to AMT as well, shoulder a disproportionate share of the federal tax burden. It is this professional class, including CPAs, who are arguably in need of tax relief.

In 2005, I ran two hypothetical income tax returns using the 2004 and 2000 editions of my Lacerte tax preparation software. The first return was for an investor with $1.8 million in dividend income, $2 million in capital gains, and a $200,000 wage. His tax rate (federal income and retirement tax divided by total income) was 16 percent in 2004, as compared to 30 percent in 2000. The Bush tax cuts saved him $543,716.

The second return was for a young, single CPA earning $60,000 in wages. His tax rate was 31.56 percent (including employer FICA and Medicare) in 2004, as compared to 34.27 percent in 2000. The Bush administration's tax cuts helped him, but only to the tune of $1,623. The eye-opener for me was that the investor's tax rate fell to 16 percent, while, with the administration's tax cuts in place, the young professional's tax rate was nearly twice that.

According to Scott A. Hodge of the Tax Foundation as quoted in your article, "Making the Tax Code more progressive - the approach favored by many Democrats for lightening the burden on the middle class - isn't an option because the tax system is already too progressive."

Any CPA with a tax preparation software program can demonstrate the flaw in his reasoning. In general, the federal income tax system is progressive over a range from lower to upper middle class, but becomes regressive when applied to the wealthy - the wealthy who establish organizations such as the Tax Foundation, the same foundation that employs Scott Hodge.

Harry Bose, CPA

Read & Bose PC

Pendleton, Ore.

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