Friday, December 21, 2007

Tax Rate Cuts – More Taxes Paid

See the Wall Street Journal December 17, 2007 editorial Taxes and Income showing how vibrant the United States economy is and that the President George W. Bush tax rate cuts have significantly increased the taxes paid by the richest Americans.
■ In 1990, the richest 5% received 27% of all income and paid 44% of all income taxes In 2000, the richest 5% received 35% of all income and paid 56% of all income taxes In 2005, the richest 5% received 36% of all income and paid 60% of all income taxes
■ “the Congressional Budget Office joined the IRS in releasing tax numbers for 2005” “the richest 1% paid about 39% of all income taxes that year. The richest 5% paid a tad less than 60%, and the richest 10% paid 70%”
■ “Americans with an income below the median -- half of all households -- paid a mere 3% of all income taxes in 2005”
■ “The share of the richest 1% jumped to 20.8% of total income in 2000, from 14% in 1990, but increased only slightly to 21.2% in 2005.” “the Clinton years were far worse for ‘inequality’."
■ “despite the tax reductions of 2001 and 2003, the rich saw their share of taxes paid rise at a faster rate than their share of income”
■ “The average family of four with an income of $40,000 saw its income tax liability fall by about $2,052 a year from the 2001 and 2003 tax cuts.”
■ “America continues to be a society of upward income mobility”
■ “The number of millionaire households in net worth also increased to nine million in 2006, up from six million in 2001”
■ “Some 304,000 Americans earned $1 million or more in annual income in 2005, compared to 110,000 in 1996 and 176,000 in 2000.”
■ “More than 13 million American households, or about one in 10, had an income of more than $100,000 a year in 2005”
■ “there is evidence that lower tax rates since 1981 have caused the rich to declare more of what they earn. In 1980, when the top income tax rate was 70%, the richest 1% paid only 19% of all income taxes; now, with a top rate of 35%, they pay more than double that share. With lower rates and fewer tax loopholes after the 1986 reform, there is less incentive to shelter income to avoid tax.”
■ “In 2005, for example, taxpayers earned an estimated $600 billion in income from capital gains,…But that might include the one-time gain from a middle-class senior couple that has lived modestly for decades but suddenly retires and sells the family business or home for $1 million or more. They may be "rich" in Hillary Clinton's definition of the term, but in fact they are benefiting in one tax year from a lifetime of hard work and thrift.”
■ “The amount of capital gains declared on tax forms has doubled since the tax rate was cut to 15% from 20% in 2003 … Dividend income has also increased by at least 50% since that rate was cut to 15% from nearly 40% in 2003.”


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