The Bush Stimulus PackagePresident Bush has just unveiled his new $674 billion economic stimulus package. Democrats, though they have little chance of passing it in the GOP-controlled Senate, have responded with their own plan, with a much smaller budget of $136 billion. The centerpiece of the Bush plan is probably the elimination of the tax. on dividends paid by shareholders, which represent as much as 364 billion dollars of the entire sum. The reasoning is that it is unfair to tax corporate profits once and then tax them again when they are paid as dividends to shareholders. However, the president's logic is flawed as there are many cases of so-called double taxation in our society. For example, when you earn a dollar as part of your income, it is taxed, and then it is taxed again in the form of sales tax when the dollar is spent. Another criticism leveled at the White House is that repealing the dividend tax disproportionately benefits the wealthy. Democrats argue that the top 1 percent of Americans would earn more than forty percent of the benefits. This is partly because the wealthiest generally receive the largest percentage of their income from dividends. Analysts say Bush is trying to appeal to the new "investor class," which now includes the majority of Americans. Interestingly, seniors and retirees make up a significant portion of shareholders who collect dividends. This is what allows George W. Bush to argue that repealing the dividend tax is designed to benefit seniors, when the wealthiest investors will reap the greatest gains. The purpose, at least in theory, of ending double taxation is to put more money in the hands of investors and encourage more Americans to invest in the struggling stock market, which is now near an all-time low. Another beneficial effect will be to encourage large companies to pay dividends, thus giving Americans more money. If this money is allocated to private and capital consumption and investment, the economy will inevitably receive the much-needed boost, as GDP = C+I+G+X. In addition to eliminating the taxation of dividends, the Bush plan proposes to make the 2001 tax cuts permanent. Once again, it can be argued that the rich are the main beneficiaries of the Bush tax cuts. But part of the problem stems from the inequalities inherent in the tax code.