Bush II; Day 514: Yeah, the rich really are getting richer

A new analysis proves what you already knew: the Bush tax cuts help the rich get richer. Key points:

-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.

Now, here's the really critical part for you to understand: the people who support Bush's tax cuts don't actually care or mind that said tax cuts heavily favor the rich. They are FIRM believers in the trickle-down theory, and think that the rich should be the sugar-daddies of us all...getting more and more money, so they can decide how to redistribute it. Sort of like communism in reverse. Don't believe me. Here's the quote:
"Stephen J. Entin, president of the Institute for Research on the Economics of Taxation, a Washington organization, and other supporters of the cuts said they did not go far enough because the more money the wealthiest had to invest, the more would go to investments that produce jobs. For investment income, Mr. Entin said, "the proper tax rate would be zero."
If you say so, dude.

And the rest of us? How'd we fare?

By contrast, few taxpayers with modest incomes benefited because most of them who own stocks held them in retirement accounts, which are not eligible for the investment income tax cuts. Money in these accounts is not taxed until withdrawal, when the higher rates on wages apply.

Those making less than $50,000 saved an average of $10 more because of the investment tax cuts, for a total of $435 in total income tax cuts, according to the computer model.

It's so sad I don't even want to say "I told you so." But what's sadder still is how that old trickle-down theory refuses to die!

Posted by elisa at April 6, 2006 07:33 PM | Jobs/Economy/Taxes