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Taxing Social Security & Gasoline: Bush Attack Lacks Context

Kerry supported an increased tax on Social Security benefits, but he also supported a repeal and Bush didn't.


Bush’s new attack ad says Kerry voted for higher taxes on Social Security benefits in 1993. That’s true, but the proceeds went to shore up Medicare, and Bush didn’t propose to repeal the increase in any of his own tax-cut bills.

The ad faults Kerry for voting against proposed tax credits for small businesses that buy health insurance for their workers, which he did. But Kerry has since proposed his own, larger tax credits for the same purpose.

The ad says Kerry supported a 50-cent-a-gallon increase in gasoline taxes, which is also true. But that was a decade ago and Kerry’s support was lukewarm at best.

Bush’s ad claims Kerry’s “plan” will increase taxes by $900 billion, which Kerry denies.


The Bush-Cheney TV spot made public March 25 is a good example of why 30-second ads are a poor way to learn about complex policy matters such as taxes. What’s left out is the context needed for understanding.

Bush-Cheney ’04 Ad:

Bush: I’m George W. Bush and I approve this message.

Announcer: John Kerry’s economic record: Troubling. Kerry voted to increase taxes on Social Security benefits. And, he voted against giving small businesses tax credits to buy health care for employees. Kerry even supported raising taxes on gasoline 50-cents a gallon. Now John Kerry’s plan will raise taxes by at least 900 billion dollars his first hundred days in office. And that’s just his first 100 days.

Taxing Social Security

It’s true as the ad states that Kerry voted to increase taxes on Social Security benefits, but that’s far from the whole story. The vote was actually for a massive deficit-reduction package in 1993 that included tax increases falling almost exclusively on the highest-earning 1 percent of households.

Included was an increase in the amount of Social Security benefits subject to income taxation, true enough. But the increase was only for those with relatively high income — over $44,000 a year for a married couple. The large majority of Social Security recipients are not affected. The Treasury Department estimates that 8.3 million taxpayers will be hit by the increases Social Security levy in 2004 — and there are 47 million who get Social Security benefits.

Also not mentioned in the Bush ad is the fact that proceeds from the 1993 increase on Social Security benefits go exclusively to the Medicare trust fund — $8.3 billion last year, according to the just-released report of the Medicare trustees. That’s one reason neither party is itching to repeal the increase. Bush didn’t propose a repeal in either his 2001 tax-cut bill or his 2003 tax-cut bill. And all but two Senate Republicans voted against repeal in 2003 when Democrats proposed it as an alternative to cutting the tax rate on stock dividends to 15%, and speeding up reductions in the top income-tax rates. Kerry voted for the repeal, which was defeated 49-51 on May 15, 2003.

Taxing Gasoline?

Kerry’s support  for a 50-cent-per-gallon increase in the federal tax on gasoline was so brief and lukewarm that it was barely noted at the time — a decade ago. One Boston Globe news story from 1994 quotes Kerry as complaining that the Concord Coalition’s scorecard had not rated him highly enough as a deficit-cutter: “It doesn’t reflect my $43 billion package of cuts or my support for a 50-cent increase in the gas tax,” the Globe quoted Kerry as saying. But neither the Bush-Cheney campaign nor FactCheck.org turned up any direct report of how and when Kerry had actually backed the 50-cent increase. Kerry sponsored no such bill in the Senate, and did not add his name to a bill offered by Sen. Charles Robb in 1993, to increase the gasoline tax 10 cents per gallon each year for five years.

Health Insurance Incentive?

The Bush ad faults Kerry for voting against tax credits for small businesses to purchase health insurance for their employees. It’s true that Kerry voted against such a measure in 2001, as did all other Senate Democrats except Georgia’s Zell Miller, who’s now backing Bush.

But the Bush ad fails to mention that Kerry now supports bigger tax incentives of his own, as part of his health-care plan. What he voted against in 2001 was a proposal by Republican Sen. Susan Collins of Maine to provide $70 billion over 10 years in tax credits to small business. But Kerry’s own health-care plan says: “Refundable tax credits for up to 50% of the cost of coverage will be offered to small businesses and their employees to make health care more affordable.” Emory University professor Kenneth Thorpe estimates that those tax credits alone amount to $79 billion over 10 years, and says other portions of Kerry’s health plan would benefit small-business employees by even more.

A $900-billion Increase?

The Bush ad once again says Kerry will raise taxes $900 billion in his first 100 days in office, something Kerry denies. We’ve dealt with this before. Kerry has proposed no such increase. However, he has said he’d repeal Bush tax cuts for persons making more than $200,000 a year, but hasn’t disclosed details of how he would do that or how much revenue he would expect to gain that way. Kerry has yet to explain how he can pay for his spending proposals, cut the deficit in half in four years as he has promised to do, and grant further tax cuts to middle-income taxpayers as he has also promised to do.



Watch Bush-Cheney ’04 Ad: “Differences”


US Department of Health and Human Services, “2004 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds,” Table I.C1.-Medicare Data for Calendar Year 2003 Washington DC 24 March 2004: p3.

U.S. Senate Roll Call Votes 108th Congrees – 1st Session S.Amdt 556 to S. 1054 Vote #149 15 May 2003.

Jill Zuckman, “Deficit-Watch Group Gives High Marks To 7 N.E. Lawmakers,” The Boston Globe,  1 March 1994.

U.S. Senate Roll Call Votes 107th Congrees – 1st Session S.Amdt. 349 to S.Amdt. 170 to H.Con.Res. 83  Vote #83  5 April 2001.


Telephone interview with Prof. Kenneth Thorpe, Emory University, 26 March 2004.