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Tuesday, July 31, 2012

CBPP: Bush Tax Cuts Have Made Tax Code Less Progressive, Delivered Windfall to Rich

CBPPCenter on Budget and Policy Priorities:  Bush Tax Cuts Have Provided Extremely Large Benefits to Wealthiest Americans Over Last Nine Years:

The tax cuts first enacted under President Bush in 2001 and 2003 have made the tax code less progressive and delivered a large windfall to the highest-income taxpayers. Tax Policy Center estimates for the years 2004 to 2012 (the years for which TPC provides data that are comparable from year to year) give us a sense of the cumulative effect of these tax cuts:

  • The average tax cut that people making over $1 million received exceeded $110,000 in each of the last nine years — for a total of more than $1 million over this period.
  • The tax cuts made the tax system less progressive. In each of the nine years from 2004 through 2012, the tax cuts increased the after-tax income of the highest-income taxpayers by a far larger percentage than they did for middle- and low-income taxpayers. For example, in 2010, the year in which all of the Bush income and estate tax cuts were fully phased in, they increased the after-tax income of people making over $1 million by more than 7.3%, but increased the after-tax income of the middle 20% of households by just 2.8%.

At a time of pressing fiscal problems and growing income inequality, continuing such large windfalls for the highest-income taxpayers is unaffordable.

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Comments

You can put the CBPP right in there with Citizens for Tax Justice, The New York Times, and Paul Krugman. In other words, take whatever they say with a grain of salt. Also, I ate at Chick-fil-A last night.

Posted by: Woody | Jul 31, 2012 6:17:11 AM

Oh yeah, I forgot NPR and PBS. Can't leave them out.

Posted by: Woody | Jul 31, 2012 6:18:20 AM

You can't use changes in after tax income to determine the relative progressiveness of the Bush tax cuts. This is innumeracy writ large and I can't believe the CBPP doesn't know this.

The Bush tax cuts were indeed progressive. They increased the percentage of federal income taxes paid by both the highest quintile and 1% relative to the bottom four quintiles. The math is pretty straight forward - 39.6% reduced to 35% is an 11.6% reduction where as 15% reduced to 10% is a 33.3% reduction. Other provisions like the expanded child care credit had a similar impact. This is painfully apparent when you look at bringing back the Clinton tax rates which would raise $700B over the next decade on high earners vs $3T for the bottom 98%. They should be ashamed for publishing such nonsense.

Posted by: M Ricketts | Jul 31, 2012 8:50:40 AM

Who cares what Woody thinks?

Posted by: Sid | Jul 31, 2012 9:12:50 AM

"...delivered a large windfall to the highest-income taxpayers."

Whose freakin' money is it in the first place? Huh? It's a "windfall" that the government "permits" them to keep more of what they earned? Give me a break...

No bias there....

PS: I have a helluva time reading your catchas. Does it make the captcha easier every time I hit "re-do"? Seems like.

Posted by: ColoComment | Jul 31, 2012 9:53:26 AM

I agree it is their money-but from what country did they earn this money-Bolivia? Perhaps the USA-and they need to make a contribution back.What country do they live in? India? Nope good old USA-and they need to support this country. We do not need a third world country in the USA where winner has all-winner takes all and winner gives nothing back.

Posted by: Nick Paleveda MBA J.D LL.M | Aug 1, 2012 7:51:35 AM