NYTIMES: First data documenting effect of Bush's tax cuts for investment income out.

[Debaser]

April 5, 2006
Big Gain for Rich Seen in Tax Cuts for Investments
By DAVID CAY JOHNSTON

The first data to document the effect of President Bush's tax cuts for investment income show that they have significantly lowered the tax burden on the richest Americans, reducing taxes on incomes of more than $10 million by an average of about $500,000.

An analysis of Internal Revenue Service data by The New York Times found that the benefit of the lower taxes on investments was far more concentrated on the very wealthiest Americans than the benefits of Mr. Bush's two previous tax cuts: on wages and other noninvestment income.

When Congress cut investment taxes three years ago, it was clear that the highest-income Americans would gain the most, because they had the most money in investments. But the size of the cuts and what share goes to each income group have not been known.

As Congress debates whether to make the Bush tax cuts permanent, The Times analyzed I.R.S. figures for 2003, the latest year available and the first that reflected the tax cuts for income from dividends and from the sale of stock and other assets, known as capital gains.

The analysis found the following:

¶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 *******d 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.

The Times showed the new numbers to people on various sides of the debate over tax cuts. 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."

Opponents say the cuts are too generous to those who already have plenty. Representative Charles B. Rangel of New York, the senior Democrat on the House Ways and Means Committee, said after seeing the new figures that "these tax cuts are beyond irresponsible" when "we're in a war; we haven't fixed Social Security or Medicare; we've got record deficits."

Because of the tax cuts, even the merely rich, making hundreds of thousands of dollars a year, are falling behind the very wealthiest, particularly because another provision, the alternative minimum tax, now costs many of them thousands and even tens of thousands of dollars a year in lost deductions.

About 3.5 million taxpayers filing their returns for last year are being hit by the alternative tax. But that figure will balloon this year to at least 19 million taxpayers, making as little as about $30,000, unless Congress restores a law that limited its effects until now, according to the Tax Policy Center in Washington, a joint project of the Brookings Institution and the Urban Institute, whose estimates the White House has declared reasonable.

The tax cut analysis was based on estimates from a computer model developed by Citizens for Tax Justice, which asserts that the tax system unfairly favors the rich. The group's estimates are considered reliable by advocates on differing sides of the tax debate. The Times, which also did its own analysis, asked the group to use the model to produce additional data on the effect of the investment tax cuts on various income groups. The analyses show that more than 70 percent of the tax savings on investment income went to the top 2 percent, about 2.6 million taxpayers.

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.

During last week's debate on whether to restore limits on the alternative minimum tax or make permanent the cuts in investment income taxes, House leaders chose as their spokesman Representative David L. Camp, a Michigan Republican. He said Republicans favored continuing investment tax cuts because that would help more people and would especially benefit those making less than $100,000.

"Nearly 60 percent of the taxpayers with incomes less than $100,000 had income from capital gains and dividends," he said on the House floor.

But I.R.S. data show that among the 90 percent of all taxpayers who made less than $100,000, dividend tax reductions benefited just one in seven and capital gains reductions one in 20.

Mr. Camp, who had said in an interview that his figures were correct, said Monday through a spokesman that he had been misinformed by the staff of the House Ways and Means Committee. But his office said he supported making the investment tax cuts permanent because cutting these rates was "good policy and good for our economy."

President Bush, in his budget, urged Congress to make permanent the reduced taxes on investment income. He also proposed limiting the effects of the alternative minimum tax through next year, saying a permanent solution "is best addressed within the context of fundamental tax reform."

The Congressional Budget Office estimated that making the investment tax cuts permanent would cost the government $197 billion over 10 years. But advocates of eliminating taxes on investments say there is no cost to the government because lowering taxes on such income encourages more investment, which should lead to more and higher-paying jobs. Taxes on wages from those jobs should more than offset the tax savings to investors, said Mr. Entin, an advocate of eliminating taxes on most investment income as a way of promoting economic growth.

However, the Congressional Research Service, an arm of Congress that analyzes issues, concluded in a January report that lower taxes on investment income may translate into lower savings because people need fewer investments to earn the same after-tax income. In another report, the research service showed how lower taxes on investment income can encourage investment outside the United States, creating jobs, but not for Americans.

The Center on Budget and Policy Priorities, which advocates for the poor, and several mainstream policy research organizations say the investment tax cuts will have insignificant positive effects and may even damage long-term economic growth by contributing to soaring budget deficits. In an era of budget deficits, "the net effect is a wash or may even be negative," said Robert Greenstein, the executive director of the center.

There have been three tax cuts for individuals under President Bush. The top tax rate on compensation was trimmed twice and is now 35 percent, from 39.6 percent when President Bush took office. Most compensation also faces a 1.45 percent Medicare tax, which is matched by the employer, making the effective federal tax rate on high earners 37.9 percent.

Then, the top rate for most investment income was reduced to 15 percent in 2003, from the 39.6 percent for dividends and 20 percent for profits on asset sales that were in effect when Mr. Bush took office.

A result is that the wealthiest Americans now pay much higher direct taxes on money they work for than on money that works for them.

[Nimrod's Son]

wah wah wah

It totally depends on how you spin these figures. The "very rich" still spend more in taxes based on percentage of income than anyone else.

And look at those unbiased sources, like the Citizens for Tax Justice and frickin Charlie Rangel

[sleeper]

http://graphics8.nytimes.com/images/.../tax.chart.gif

[sleeper]

Originally Posted by Nimrod's Son

And look at those unbiased sources, like the Citizens for Tax Justice and frickin Charlie Rangel

yeah what kind of hack journalism is this! this david johnston guy is a total fucking amateur. he can take his pulitzer prize and shove it!

[Debaser]

Originally Posted by Nimrod's Son

wah wah wah

It totally depends on how you spin these figures. The "very rich" still spend more in taxes based on percentage of income than anyone else.

No, they don't.

[Nimrod's Son]

Originally Posted by sleeper

yeah what kind of hack journalism is this! this david johnston guy is a total fucking amateur. he can take his pulitzer prize and shove it!

Well he all but ignored the pecentage change in average tax bill which shows lower income groups getting the largest benefits

[jczeroman]

Awesome. I'd like to see the rich pay no taxes!

[Debaser]

Originally Posted by Nimrod's Son

Well he all but ignored the pecentage change in average tax bill which shows lower income groups getting the largest benefits

He only ignored that because it's not true.

[sleeper]

Originally Posted by Debaser

He only ignored that because it's not true.

truth? do you know who youre speaking to? guy voted for bush, i dont think he gives a damn about this "truth" thing. this truth is just another liberal concoction. youre showing your true communist colours now debaser

[jczeroman]

Originally Posted by sleeper

guy voted for bush

In 2000, when Bush seemed like he'd actually make a half-way decent president.

[Corganist]

Wow. What an article. Tax cuts on investments means that people who invest pay less tax? Shocking!

[sleeper]

Originally Posted by jczeroman

In 2000, when Bush seemed like he'd actually make a half-way decent president.

step off. there are no excuses here. guy followed it up with a strategic vote for arnold (then later vigorously condemned all who would dare strategic vote) and, worst of all, guy is a christian nutcase. no excuses here, hippie

didnt you vote for bush too? worse than nimrod

[Debaser]

Originally Posted by sleeper

step off.

.

[Nimrod's Son]

Originally Posted by sleeper

step off. there are no excuses here. guy followed it up with a strategic vote for arnold (then later vigorously condemned all who would dare strategic vote) and, worst of all, guy is a christian nutcase. no excuses here, hippie

didnt you vote for bush too? worse than nimrod

I voted for Badnarik in 2004. You choose not to remember that because it's easier that way.

[Nimrod's Son]

Originally Posted by Debaser

He only ignored that because it's not true.

Wait.. so what you're saying is that the right hand side of the graph that sleeper poster is "not true"? But accept the rest of it?

Wow, that's selectivity at its finest.

[phaedrus]

sleeper,

[ryan patrick]

Originally Posted by Corganist

Wow. What an article. Tax cuts on investments means that people who invest pay less tax? Shocking!

[sleeper]

Originally Posted by Nimrod's Son

I voted for Badnarik in 2004. You choose not to remember that because it's easier that way.

you just go whatever way the winds blowing dont you? youre a real dupe am i wrong? it wouldve been so much cooler if you were friends with jc during that "fascist" phase of his. this whole libertarian fad lacks the glamour and sexiness of something like fascism, wouldnt you agree? "i voted facist in 04"


one last question: did he convert you to christianity too? guy is swindling you hardcore

[jczeroman]

Originally Posted by sleeper

worst of all, guy is a christian nutcase. no excuses here, hippie

He's a catholic who doesn't attend church if I remember right...

Originally Posted by sleeper

didnt you vote for bush too? worse than nimrod

I was 18.

[sleeper]

Originally Posted by Nimrod's Son

Wait.. so what you're saying is that the right hand side of the graph that sleeper poster is "not true"? But accept the rest of it?

Wow, that's selectivity at its finest.

i see this time you didnt even read as far as... well the headline. i mean, if you did youd clearly see which tax cut this article was about. hell, you didnt even have to read at all, the chart helpfully highlighted the column for you. i know your old but are you cataracts giving out already?

[sleeper]

Originally Posted by jczeroman

He's a catholic who doesn't attend church if I remember right...




I was 18.

catholic eh? this just gets better and better

thats no excuse. i first voted when i was 18 too and it wasnt for anyone who was nearly as horrendous as bush. face it, al gore wouldve rocked

[Debaser]

Originally Posted by Corganist

Wow. What an article. Tax cuts on investments means that people who invest pay less tax? Shocking!

Here's the point then for you fellas being purposely dense.


"These are the basic ideas that guide my tax policy: lower income taxes for all, with the greatest help for those most in need. Everyone who pays income taxes benefits — while the highest percentage tax cuts go to the lowest income Americans. I believe this is a formula for continuing the prosperity we've enjoyed, but also expanding it in ways we have yet to discover. It is an economics of inclusion. It is the agenda of a government that knows its limits and shows its heart."
— President George W. Bush

http://www.whitehouse.gov/news/reports/taxplan.html

[Debaser]

Wow. What a quote and article. Bush is a lying sack? Shocking!

[jczeroman]

Originally Posted by Debaser

Here's the point then for you fellas being purposely dense.


"These are the basic ideas that guide my tax policy: lower income taxes for all, with the greatest help for those most in need. Everyone who pays income taxes benefits — while the highest percentage tax cuts go to the lowest income Americans. I believe this is a formula for continuing the prosperity we've enjoyed, but also expanding it in ways we have yet to discover. It is an economics of inclusion. It is the agenda of a government that knows its limits and shows its heart."
— President George W. Bush

http://www.whitehouse.gov/news/reports/taxplan.html

The highest percentage did go to the lower brackets. The highest monetary amount is, of course, going to go to the rich. This is basic math.

[Corganist]

Originally Posted by Debaser

Here's the point then for you fellas being purposely dense.


"These are the basic ideas that guide my tax policy: lower income taxes for all, with the greatest help for those most in need. Everyone who pays income taxes benefits — while the highest percentage tax cuts go to the lowest income Americans. I believe this is a formula for continuing the prosperity we've enjoyed, but also expanding it in ways we have yet to discover. It is an economics of inclusion. It is the agenda of a government that knows its limits and shows its heart."
— President George W. Bush

http://www.whitehouse.gov/news/reports/taxplan.html

But according to the chart sleeper posted, the lowest income bracket had a 48 percent decrease in their overall tax burden, and the highest only had a 15 percent decrease. So since when is 48 not more than 15? Sure, it appears that higher income brackets got a break on investment taxes (even though...the lower brackets had their own already low rates knocked down even lower and in some cases eliminated by the cuts), but in the scheme of things its not substantial enough to make one think that the Bush tax cuts were just some ploy to get money to rich people. They still didn't get even a third of the overall reduction that the lowest bracket got.

[Debaser]

Originally Posted by jczeroman

The highest percentage did go to the lower brackets. The highest monetary amount is, of course, going to go to the rich. This is basic math.

Typical libertarian narrowcasting thought process. This is basic math AND context.

Depends from which end you look at it obviously. Percentage tax cut of a person's tax bill vs. percenatge of monetary amount of tax cut going to who.

from above:
"The top 2 percent of tax payers, those making more than $200,000, received more than 70 percent of the increased tax savings from these cuts on investment income."

[Nimrod's Son]

Originally Posted by Corganist

But according to the chart sleeper posted, the lowest income bracket had a 48 percent decrease in their overall tax burden, and the highest only had a 15 percent decrease. So since when is 48 not more than 15? Sure, it appears that higher income brackets got a break on investment taxes (even though...the lower brackets had their own already low rates knocked down even lower and in some cases eliminated by the cuts), but in the scheme of things its not substantial enough to make one think that the Bush tax cuts were just some ploy to get money to rich people. They still didn't get even a third of the overall reduction that the lowest bracket got.

I already made this post and was told it was lies

[Nimrod's Son]

Originally Posted by Debaser

Typical libertarian narrowcasting thought process. This is basic math AND context.

Depends from which end you look at it obviously. Percentage tax cut of a person's tax bill vs. percenatge of monetary amount of tax cut going to who.

from above:
"The top 2 percent of tax payers, those making more than $200,000, received more than 70 percent of the increased tax savings from these cuts on investment income."

You're talknig about net amounts, not percentage. That's pure spin, and I think (hope?) you know that.

[Nimrod's Son]

Originally Posted by sleeper

i see this time you didnt even read as far as... well the headline. i mean, if you did youd clearly see which tax cut this article was about. hell, you didnt even have to read at all, the chart helpfully highlighted the column for you. i know your old but are you cataracts giving out already?

I'll ignore your huge grammatical errors, and instead say that the post you quoted was referring to Debaser's assertation that the right hand side of the chart you posted was a lie

[Nimrod's Son]

Originally Posted by sleeper

you just go whatever way the winds blowing dont you? youre a real dupe am i wrong? it wouldve been so much cooler if you were friends with jc during that "fascist" phase of his. this whole libertarian fad lacks the glamour and sexiness of something like fascism, wouldnt you agree? "i voted facist in 04"


one last question: did he convert you to christianity too? guy is swindling you hardcore

What? I was Libertarian before he was.

Also I was born and raised Catholic.