Wednesday, April 05, 2006
The Bush Tax Cuts - Generosity of the 500 Lb. Gorilla
A clear picture is emerging of the effects of the much-vaunted tax cuts championed by the president and passed by Congress in 2003. It is not a "water under the bridge" issue. We are paying for the tax cuts and we'll continue to pay for them. David Cay Johnston writes in The NY Times: "The first data to document the effect of President Bush's tax cuts for investment income show that they have significantly lowered the tax burden on the richest Americans, reducing taxes on incomes of more than $10 million by an average of about $500,000."
Excerpts from NY Times:
"When Congress cut investment taxes three years ago, it was clear that the highest-income Americans would gain the most, because they had the most money in investments. But the size of the cuts and what share goes to each income group have not been known.
The analysis found the following:
- Among taxpayers with incomes greater than $10 million, the amount by which their investment tax bill was reduced averaged about $500,000 in 2003, and total tax savings, which included the two Bush tax cuts on compensation, nearly doubled, to slightly more than $1 million.
- These taxpayers, whose average income was $26 million, paid about the same share of their income in income taxes as those making $200,000 to $500,000 because of the lowered rates on investment income.
- Americans with annual incomes of $1 million or more, about one-tenth of 1 percent all taxpayers, reaped 43 percent of all the savings on investment taxes in 2003. The savings for these taxpayers averaged about $41,400 each. By comparison, these same Americans received less than 10 percent of the savings from the other Bush tax cuts, which applied primarily to wages, though that share is expected to grow in coming years.
- The savings from the investment tax cuts are expected to be larger in subsequent years because of gains in the stock market.
Note: NY Times articles can be accessed free of charge only for 7 days after publication.