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spurster
08-13-2004, 11:03 AM
www.nytimes.com/2004/08/1...13tax.html (http://www.nytimes.com/2004/08/13/politics/campaign/13tax.html)

August 13, 2004
Report Finds Tax Cuts Heavily Favor the Wealthy
By EDMUND L. ANDREWS

WASHINGTON, Aug. 12 - Fully one-third of President Bush's tax cuts in the last three years have gone to people with the top 1 percent of income, who have earned an average of $1.2 million annually, according to a report by the nonpartisan Congressional Budget Office to be published Friday.

The report calculated that households with incomes in that top 1 percent were receiving an average tax cut of $78,460 this year, while households in the middle 20 percent of earnings - averaging about $57,000 a year - were getting an average cut of only $1,090.

The new estimates confirm what independent tax analysts have long said: that Mr. Bush's tax cuts have been heavily skewed to the very wealthiest taxpayers. Those are also the people, however, who pay a disproportionate share of federal income taxes.

The calculations, which were requested by Congressional Democrats, are all but certain to intensify a central debate between Mr. Bush and Senator John F. Kerry, the Democratic presidential nominee.

Mr. Bush has argued that the tax cuts provided crucial support to the economy at a time when it was mired in a recession and reeling from the effects of a stock market collapse, terrorist attacks and corporate scandals.

Mr. Kerry has argued that the cuts were tilted so much in favor of the wealthy that they provided relatively little stimulus to the economy and set the stage for record budget deficits. Since 2001, the federal budget has deteriorated from a surplus of more than $100 billion to a deficit expected to exceed $400 billion in 2004.

Mr. Bush's top economic priority has been to make his tax cuts permanent, rather than letting them expire at the end of this decade as they would under current law. Mr. Kerry would seek to roll back the tax cuts for households with incomes above $200,000 a year, a move his campaign estimates would save $860 billion over 10 years, and use that money in large part to pay for a vast new national health care plan.

According to the new report from the Congressional Budget Office, about two-thirds of the benefits from the tax cuts, enacted in 2001 and 2003, went to households in the top fifth of earnings, with an average income of $203,740.

But the report also gave Republicans support for their contention that tax reduction had brought some benefit to people in almost all income categories. People with the bottom fifth of income, for example, averaging earnings of only $16,620, saw their effective tax rate drop to 5.2 percent from 6.7. Yet because lower- and many middle-income families had been paying very little federal income tax in the first place, those in that bottom fifth of earnings received an average tax cut of only $250.

"It doesn't matter who you are, the report shows that you are better off now than you were before the tax cuts,'' said a House Republican aide. "It's showing that everybody's tax burden has gone down as a result of the tax cuts.''

The tax cuts of 2001 and 2003 reduced tax rates for people in all income brackets. But they had a disproportionate effect on people at the very highest income levels because they had already been paying a disproportionate share of total federal taxes and in part because stock dividends got a special lower rate.

People in the very top income categories fared better by almost any measure, according to the report. The average after-tax income for people in the top 1 percent of income earners climbed 10.1 percent, while that of those in the middle 20 percent climbed 2.3 percent, and that of those in the bottom fifth only 1.6 percent.

Put another way, people with the top 1 percent of income saw their share of the tax burden drop to 20.1 percent after the tax cuts from 21.9 percent under the old law.

William G. Gale, a longtime tax analyst at the Brookings Institution, said the new Congressional report was consistent with his own calculations on the distribution of benefits from Mr. Bush's tax cuts.

"It's not just that lower-income people are getting smaller benefits,'' Dr. Gale said. "It's also that these tax cuts will eventually have to be paid for with either spending cuts or tax increases, and those are likely to be less progressive than the taxes they are paying now.''

Copyright 2004 The New York Times Company

spurster
08-13-2004, 11:08 AM
Note that $78,460 is about 6.5% of $1,200,000, while $1,090 is about 1.9% of $57,000. I guess BushCo truly believes "For to all those who have, more will be given, and they will have an abundance".

Tommy Duncan
08-13-2004, 11:33 AM
Might those be results be due to the fact that the federal income tax system is significantly progressive?

A better criticism would be one that looked at the reduction in income tax paid as a percentage of the income tax liability prior to the rate reductions.

The top 1% paid 65% of all individual income taxes in 2002, from what I recall.

Tommy Duncan
08-13-2004, 11:36 AM
The article alludes to this.


But the report also gave Republicans support for their contention that tax reduction had brought some benefit to people in almost all income categories. People with the bottom fifth of income, for example, averaging earnings of only $16,620, saw their effective tax rate drop to 5.2 percent from 6.7. Yet because lower- and many middle-income families had been paying very little federal income tax in the first place, those in that bottom fifth of earnings received an average tax cut of only $250.

"It doesn't matter who you are, the report shows that you are better off now than you were before the tax cuts,'' said a House Republican aide. "It's showing that everybody's tax burden has gone down as a result of the tax cuts.''

The tax cuts of 2001 and 2003 reduced tax rates for people in all income brackets. But they had a disproportionate effect on people at the very highest income levels because they had already been paying a disproportionate share of total federal taxes and in part because stock dividends got a special lower rate.





People in the very top income categories fared better by almost any measure, according to the report. The average after-tax income for people in the top 1 percent of income earners climbed 10.1 percent, while that of those in the middle 20 percent climbed 2.3 percent, and that of those in the bottom fifth only 1.6 percent.

Put another way, people with the top 1 percent of income saw their share of the tax burden drop to 20.1 percent after the tax cuts from 21.9 percent under the old law.

There you go. "The Rich" are still paying a far higher income tax rate than the proletariat. No need to panic.

Joe Chalupa
08-13-2004, 11:43 AM
We agree.
Sincerely,
Billionaires for Bush

Ruby Ridge
08-13-2004, 01:31 PM
link (http://story.news.yahoo.com/news?tmpl=story&e=5&u=/nm/20040813/pl_nm/campaign_taxes_cbo_dc)

From a similar story:


Taxpayers whose incomes range from $51,500 to around $75,600, saw their share of federal tax payments increase, according to CBO figures cited by The Washington Post.

Tommy Duncan
08-13-2004, 01:35 PM
So the share increased of a declining tax burden for all taxpayers.

Tommy Duncan
08-13-2004, 01:41 PM
The following is the link to the actual CBO report and associated files. We'll see if the journalists have interpreted the results accurately.

www.cbo.gov/ftpdoc.cfm?index=5746&type=1 (http://www.cbo.gov/ftpdoc.cfm?index=5746&type=1)

Looking at pp.10-11 of the section entitled "Effective Federal Tax Rates Under Current Law, 2001 to 2014" of the report (http://www.cbo.gov/ftpdoc.cfm?index=5746&type=1)...

A quick glance would indicate that at most the increase was 0.7% of the total federal tax payments and perhaps as low as 0.1%. Their effective tax rate certainly declined, no doubt about it.

If you look at the share of the individual tax burden, then the highest quintile of individual income earners actually saw an increase in their share of the total individual tax burden from 2001 to 2003 of 0.5%. The next quintile's increase was also 0.5%. The middle stayed even and the lower two quintiles saw their shares drop.