> Yeah, that's the President's goal. And mine. Uh huh. Accelerate > pre-tax income inequality through adjustments in the tax rate. That > makes a lot of sense.
Let's look at the numbers: The tax cut plan that was passed has four significant sections: the estimated 10 year cost of each is: 1) introduction of 10% tax bracket: $383 billion 2) reduction of rates above 28%: $560 billion 3) estate tax repeal: $295 billion 4) child tax credit: $192 billion #s 1 & 4 apply to most income brackets....although you have to pay at least as much in taxes as the credit to get the benefit for #4. #2 applies to couples making above $175,000/year. #3 only applies to those with estates worth more than $1,000,000. Only 2% of the estates are subjected to this tax, and only 4500 estates are responsible for half of the tax. The source of this is: http://www.uaw.org/publications/jobs_pay/01/0401/jpe02.html Its clearly a partisan site, but they appear to have obtained numbers from neutral sources. If you wish to furnish different numbers, I'd be happy to discuss how we can calculate the costs of the tax cut. We can also see the breakdown of the annual benefit (once the tax break is fully in place) by income bracket: Income Group Average Income % of Total Tax Cut Lowest 20% $9,300 0.90% Second 20% $20,600 5.30% Middle 20% $34,400 8.50% Fourth 20% $56,400 14.50% Next 15% $97,400 23.70% Next 4% $210,000 9.50% Top 1% $1,117,000 37.60% This is from: http://www.inequality.org/bushtaxplan.html Not an unbiased source, but they seem to obtain numbers from unbiased sources. Again, if you have different sources, I'd be willing to discuss this. Kerry mentioned in the debate the top 1% now benefits from the tax cuts more than the bottom 80% of income earners. This has not been brought up on any of the post debate "fact checks" that I have seen. It has not been directly countered by the Bush campaign...with hard numbers...so I think we can rely on its accuracy. > And I suppose that that's why the President lowered the bottom tax bracked > from 15% to 10%, and took millions of poor families off the tax roles? > is that why Citizen's for Tax Justice - not exactly a conservative group - > concluded that Bush's first tax cut gave benefits to workers in essentially > the same proportion to which they pay taxes? That's true in a very limited sense: if you only consider part of the tax cut and look at only a fraction of the total tax bill. It would be inaccurate to say that only the wealthy had their taxes cut. But, it would not be inaccurate to say that the net winners are the most wealthy, and the net losers are eveyone else. There are two ways to look at this: taxes and loss future benefits. For wage earners in the lower tax brackets, the main tax burden is not income tax, but the Social Security/Medicare tax. For example, a family of 4 with 100,000 in self-employed income, one child qualifying for the child tax credit, paying about $5500 for health insurance, and $15,000 in total deductions (mortgage, real estate taxes,charitable contributions) would pay income taxes of $8764 and Social Security/Medicare taxes of $13,466. (as calculated by TurboTax 2003) The deductions I have quoted are quite modest for a homeowner. (mortage+insurance+real estate taxes can be 28% of income according to the general mortgage qualificaiton calculations). For people employed by others, half of the Social Security/Medicare tax is counted as part of the total compensation...not wages, so the same person would only be earning $93,267...but that would be enough to put the family income at about the 75% household income bracket. (BTW, this is just with 1 wage earner, the discrepency would be greater if both parents earned <~75k.) So, lets take another family of four, employed with wage income of $50,000 with employer funded health insurance. This family takes the standard deduction, and has one child qualifying for the child tax credit. Their income tax is $3549, their SS/Medicare tax is $7602. Second, only the wealthiest 2% need to worry about the estate tax. Since this is not an income tax, it "flies under the radar" when only the income tax is mentioned. In short, I'd argue that the fairest way to consider the change in the % of Federal tax burden is to use the following ratio: (reduction in total Federal tax burden)/(total Federal tax burden). The second point is the cost of these tax cuts. The future ability of the federal government to address the underfunding of Social Security and Medicare is reduced when other debt is increased. This means an increased likelihood of reduced benefits/a larger reduction in benefits in the future. This reduction hits different income brackets fairly evenly. So the cost of the tax reduction is spread evenly, while the benefits are focused at the top of the income. This reduces the roll of the Federal government in putting a brake on the concentration of income in relatively few hands. I view this as an essential role of the Federal government, one that allows us to keep a stable, capitalistic hybrid system. Dan M. _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
