Shocking: Tax Cuts Go to the Wealthy

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In the New York Times today, David Cay Johnston has some data to back up what many people have been saying all along—that Bush’s 2003 tax cuts on dividends and other investment income mostly benefited the very wealthy:

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 contrast, t]hose 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.

Meanwhile, Johnston reports that the usual administration line on these tax cuts—that lower taxes on investment will lead to more investment—may not even be true, according to the non-partisan Congressional Research Service. (In fact, they may even lead to lower savings because “people need fewer investments to earn the same after-tax income.) So much for that rationale. But hey, at least the tax cuts were good for growth. No, wait, that’s probably not true. Okay, well at least they were affordable and didn’t blow a hole in the federal budget. No, that’s not true either. Um…

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