Analysis: Bush Tax Cuts Far More Concentrated On Wealthiest Americans

New York Times David Cay Johnson April 4, 2006 at 11:08 PM
READ MORE: George W. Bush, New York 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.

An analysis of Internal Revenue Service data by The New York Times found that the benefit of the lower taxes on investments was far more concentrated on the very wealthiest Americans than the benefits of Mr. Bush's two previous tax cuts: on wages and other noninvestment income.

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.

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"45 percent of all of the dividend income goes to people with $50,000-or-less incomes, family incomes. Nearly three-quarters of it goes to families with $100,000 or less family income."
?White House senior adviser Karl Rove, discussing the Bush tax proposal in a meeting with reporters, as reported by Dana Milbank in the Jan. 28 Washington Post.

"Not exactly. It is true that 43.8 percent of tax returns with dividend income are from households with less than $50,000 in income and 73.8 percent of such returns are from households with less than $100,000. But that doesn't mean the little guy earning less than $50,000 gets '45 percent of all the income' or that the Main Street earners below $100,000 get 'three-quarters' of dividend income.

"In fact, those earning less than $50,000 get 14.7 percent of dividend income, and those earning less than $100,000 get 32.7 percent, according to a Brookings Institution/Urban Institute analysis. The former would get 6.8 percent of the benefit of Bush's dividend plan, while the latter would get 20.9 percent."

?Milbank, in the Jan. 28 Washington Post.

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