November 15, 2006
Arizona Republic debunks "tax cuts for the rich"
A recent report by the Tax Foundation illustrates that the Bush tax cuts were progressive in effect as well as in structure.
The foundation used detailed income tax data for 2004 (the most recent year available) to calculate changes in relative tax burdens since 2000. Those making less than $100,000 a year saw a reduction in the percentage of their income paid in taxes; those making more than $100,000 a year had an increase.
The income tax data also sheds some light on the income inequality debate, which usually relies on Census data. Certainly, one would assume that income reported to the IRS is more reliable than income reported to the Census Bureau on a survey.
In the IRS data, the percentage of overall income made by those earning between $75,000 and $200,000 a year increased from 2000 to 2004. That of those making over $200,000 a year decreased.
In fact, those making over $200,000 a year was the only category that saw both a decrease in its share of national income and an increase in the percentage of that income paid in taxes.
Nor have "tax breaks for the rich" caused a sharp increase in the federal deficit, another Democratic refrain. In the last two years, federal revenues have increased by 14 percent and 12 percent. In fact, according to the Congressional Budget Office, federal revenues are back to the percentage of gross domestic product they have averaged since 1965.
Despite their rhetoric, Democrats understand that the Bush tax cuts gave substantial relief to middle-income and lower-income Americans. At some point, they will propose extending those tax cuts.
