Bankruptcy Blog: May 1, 2005

Nowadays politicians’ favorite mantra seems to be “lower taxes.” Corporate taxes. Estate taxes. Taxes on millionaires. Taxes on working folks. The We-Hate-Taxes leadership in Washington says “cut ‘em all.”

This “No New Taxes” routine (with a little “No Old Taxes, Either” tacked on) has one glaring exception: A big tax increase on folks who are broke. The Bankruptcy Bill President Bush signed into law last week raised the fees on every family that files from $155 to $200.

What, you thought no one below median income would suffer? The new taxes, like almost every other provision in the bill, apply to everyone — no matter how low their income.

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The (public) reason was to pay for 28 new judgeships created by the bill, but the numbers are a little off. The government estimates the five-year cost of the new judges at $25 million, but the government puts the five-year net revenues (from the fee increase alone) at about $150 million.

So will the fee be lowered? Of course not. That money will go where taxes usually go — straight to the general revenue coffers — fresh from the hides of people in desperate financial trouble.

Congress has kicked these families when they are down by passing a harsh new bankruptcy bill, and then kicked them again with a tax to fatten general revenues. Get sick? Lose your job? Trying to save your house? Boy, have we got a tax for you.

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