New Study Shows Bush Tax Cut Windfall for Wealthy
Last year, Minnesota Rep. Michele Bachmann summed up what would become the de facto Republican platform for the 2010 midterm elections when she fretted, "We're running out of rich people in this country." Now, as the GOP demands a $700 billion Treasury-draining tax cut for the wealthiest Americans even as it calls for a balanced budget amendment to the Constitution, a new study shows that the rich will win even if they lose.
As the New York Times reported Wednesday, the nonpartisan Joint Committee on Taxation examined the impact of letting the Bush tax cuts of 2001 and 2003 lapse for just the top bracket taxpayers. The analysis, request by Democrats on the House Way and Means Committee, found:
Taxpayers with income of more than $1 million for 2011 would still receive on average a tax cut of about $6,300 compared with what they would have paid under rates in effect until 2001...That compares, however, with the roughly $100,000 average tax cut that households with more than $1 million in income would receive under current rates.
Filers with taxable income of $500,000 to $1 million would still get on average a tax cut of $6,700 compared with pre-2001 rates, according to the data from the tax analysts. But that compares with roughly $17,500 if the top Bush tax rates were maintained.
As it turns out, the wealthy have never had it so good - at least since 1929. Income inequality in the United States has reached record levels not seen since the start of the Great Depression. Over the three decades ending in 2007, CBPP found that the top 1 percent's share of the nation's total after-tax household income more than doubled, from 7.5 percent to 17.1 percent. During that time, the share of the middle 60% of Americans dropped from 51.1 percent to 43.5 percent; the bottom four-fifths declined from 58 percent to 48 percent. As for the poor, they fell further and further behind, with the lowest quintile's income share sliding to just 4.9%.
To be sure, the deficit-exploding Bush tax cuts played an essential role in fueling the gap. As the Center for American Progress reported in 2008, that upper class payday delivered a third of its total benefits to the wealthiest 1% of Americans. More shocking still, between 2001 and 2007, the income share of the 400 richest American taxpayers doubled even as their tax rates were halved. As the New York Times revealed in October, by 2007 the top 1% - the 1.5 million families earning more than $400,000 - reaped 24% of the nation's income. The bottom 90% - the 136 million families below $110,000 - accounted for just 50%. Even when the top two rates were 36% and 39.6%, as they were during the Clinton era and to President Obama now proposes returning, the wealthy (along with almost everyone else) did very well, indeed.
The JCT analysis is just the latest in a long list demolishing the "10 Republican Lies about the Bush Tax Cuts." The assessment makes clear that Democrats aren't proposing an across the board tax hike on January 1st costing $3.8 trillion, as GOP leaders like Sarah Palin pretend. The fear-mongering about the supposedly devastating impact on small businesses, too, is debunked:
For their part, Republicans do not emphasize the impact of extending the tax cuts for wealthy individuals. Rather, they say Mr. Obama is about to spring a big tax increase on many small-business owners who file their taxes as individuals. Analyses from the Joint Committee on Taxation and the Tax Policy Center, a nonpartisan research organization, show that less than 3 percent of filers with small-business income pay at the top two income tax rates, and many of those are doctors and lawyers in partnerships.
Why is why, given the destruction of their talking points about the expiring Bush tax cuts, Republicans have returned to a tried if untrue deception. Sadly aided and abetted by much of the mainstream media, GOP leaders are justifying their $700 billion plus windfall for the wealthiest Americans by claiming that the fate of the economic recovery depends on the rich - and the rich alone.