Congressional Budget Office Confirms Bush Tax Cuts Go to Richest 1%
Budget Office Says Biggest Tax Cuts Go to Richest 1%
By JACKIE CALMES
Staff Reporter of THE WALL STREET JOURNAL
August 13, 2004; Page A6
WASHINGTON -- President Bush's three tax-cut laws will reduce this year's income taxes for the richest 1% of taxpayers by an average of $78,460, more than 70 times the average benefit for the middle 20% of taxpayers, congressional analysts found.
The nonpartisan Congressional Budget Office today will release the government's first multiyear projection of the Bush tax cuts by income class. The report, made at the Democrats' request, confirms what the Democrats and their presidential nominee, Sen. John Kerry of Massachusetts, have charged -- that the wealthy disproportionately benefit.
The CBO's release, along with Democrats' separate calculations based on CBO's data, are sure to elevate the tax cuts as an issue in the presidential race, with less than three months before Election Day.
Using CBO's findings, congressional Democratic staff calculated that the lowest 20% of taxpayers -- those with total annual income in 2001 dollars of $14,900 to $34,200 -- receive a tax cut of $250 on average for 2004. The next 20% of taxpayers, with income as much as $51,500, get an average tax cut of $800, and the middle fifth of taxpayers, which includes those earning as much as $75,600, receive an average $1,090 tax cut.
For the next-highest 20%, with income as much as $182,700, the average tax cut for 2004 is $1,770. And for the top fifth of taxpayers, whose annual income is above $182,700, the tax cut is $7,740 on average. The top 1% that get an average $78,460 tax cut includes taxpayers with more than $1 million in annual income.
Congressional Republicans countered that the richest 20% of taxpayers still will pay 63.5% of all income taxes for 2004, as they did in 2001. The CBO analysis doesn't account for reductions in estate taxes.
At Mr. Bush's campaign events, which are open only to supporters with tickets, the president often shares the stage with local taxpayers to publicize their tax breaks under his policies. Because most of them are parents, they receive the $1,000-a-child tax credit in addition to cuts in their income-tax rate. That results in a tax cut that is larger than the average for their income class. For example, while the average annual tax cut for the middle fifth of taxpayers is $1,090, someone with at least two children would receive more than double that figure.
Three of the most popular tax cuts -- the child credit, the lowest 10% tax rate and "marriage penalty" relief -- expire after this year. Extending them is a top priority for Mr. Bush and congressional Republicans, but internal disputes prevented a vote last month. Mr. Kerry and other Democrats also favor those tax cuts; it is the reductions for Americans with annual incomes of $200,000 or more that the Democratic senator wants to repeal, to pay for health care and other initiatives.
By JACKIE CALMES
Staff Reporter of THE WALL STREET JOURNAL
August 13, 2004; Page A6
WASHINGTON -- President Bush's three tax-cut laws will reduce this year's income taxes for the richest 1% of taxpayers by an average of $78,460, more than 70 times the average benefit for the middle 20% of taxpayers, congressional analysts found.
The nonpartisan Congressional Budget Office today will release the government's first multiyear projection of the Bush tax cuts by income class. The report, made at the Democrats' request, confirms what the Democrats and their presidential nominee, Sen. John Kerry of Massachusetts, have charged -- that the wealthy disproportionately benefit.
The CBO's release, along with Democrats' separate calculations based on CBO's data, are sure to elevate the tax cuts as an issue in the presidential race, with less than three months before Election Day.
Using CBO's findings, congressional Democratic staff calculated that the lowest 20% of taxpayers -- those with total annual income in 2001 dollars of $14,900 to $34,200 -- receive a tax cut of $250 on average for 2004. The next 20% of taxpayers, with income as much as $51,500, get an average tax cut of $800, and the middle fifth of taxpayers, which includes those earning as much as $75,600, receive an average $1,090 tax cut.
For the next-highest 20%, with income as much as $182,700, the average tax cut for 2004 is $1,770. And for the top fifth of taxpayers, whose annual income is above $182,700, the tax cut is $7,740 on average. The top 1% that get an average $78,460 tax cut includes taxpayers with more than $1 million in annual income.
Congressional Republicans countered that the richest 20% of taxpayers still will pay 63.5% of all income taxes for 2004, as they did in 2001. The CBO analysis doesn't account for reductions in estate taxes.
At Mr. Bush's campaign events, which are open only to supporters with tickets, the president often shares the stage with local taxpayers to publicize their tax breaks under his policies. Because most of them are parents, they receive the $1,000-a-child tax credit in addition to cuts in their income-tax rate. That results in a tax cut that is larger than the average for their income class. For example, while the average annual tax cut for the middle fifth of taxpayers is $1,090, someone with at least two children would receive more than double that figure.
Three of the most popular tax cuts -- the child credit, the lowest 10% tax rate and "marriage penalty" relief -- expire after this year. Extending them is a top priority for Mr. Bush and congressional Republicans, but internal disputes prevented a vote last month. Mr. Kerry and other Democrats also favor those tax cuts; it is the reductions for Americans with annual incomes of $200,000 or more that the Democratic senator wants to repeal, to pay for health care and other initiatives.
posted by Ron Chusid at 9:36 AM
1 Comments:
More on the CBO study on tax cuts:
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.''
http://www.nytimes.com/2004/08/13/politics/campaign/13tax.html
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