Wednesday, April 05, 2006

Big Gain for Rich Seen in Tax Cuts for Investments

You can chalk this up to Bush's tax cuts for his ubber-rich clients. From the 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.

Graphic: Who Benefits the Most. New York Times Graphic

As Congress debates whether to make the Bush tax cuts permanent, The Times analyzed I.R.S. figures for 2003, the latest year available and the first that reflected the tax cuts for income from dividends and from the sale of stock and other assets, known as capital gains.

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.

About 3.5 million taxpayers filing their returns for last year are being hit by the alternative tax. But that figure will balloon this year to at least 19 million taxpayers, making as little as about $30,000, unless Congress restores a law that limited its effects until now, according to the Tax Policy Center in Washington, a joint project of the Brookings Institution and the Urban Institute, whose estimates the White House has declared reasonable.

Graphic: Where the Dividends Live. New York Times Graphic

The tax cut analysis was based on estimates from a computer model developed by Citizens for Tax Justice, which asserts that the tax system unfairly favors the rich. The group's estimates are considered reliable by advocates on differing sides of the tax debate. The Times, which also did its own analysis, asked the group to use the model to produce additional data on the effect of the investment tax cuts on various income groups. The analyses show that more than 70 percent of the tax savings on investment income went to the top 2 percent, about 2.6 million taxpayers.

Why am I not surprised at this? Now I'm not saying we should sock it to the rich, but I have a feeling that President Bush is selling out our country's future to his rich elites. And it is not just here with Bush's tax policy here--Bush wants to repeal the estate tax, which the Republicans are now calling "the death tax," which will reduce the size of the U.S. Treasury even more. And while Bush is calling for all these tax cuts to be made permanent, we are currently embroiled in two Middle Eastern wars--Iraq and Afghanistan--with no resolution in sight. Where's the money coming from for fighting these wars? It is all being charged on the government's credit card, which Congress has just raised the debt ceiling to $9 trillion, while the Federal Reserve has raised the interest rates, making it more expensive to borrow on the government's credit card.

Are we living in the Twilight Zone here?

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