Economy and Jobs Watch: Tax Cuts Go Mostly to the Rich

The Congressional Budget Office has released a new study detailing the impact of recent tax changes on various income levels. The bottom line: The very, very wealthy made out very, very well.

A New York Times article about the study said about one-third of the tax cuts went to the top 1 percent of households (those making an average of about $1.2 million per year), with each receiving on average $78,460 a year. And about two-thirds of the benefits went to the top fifth of households making an average income of more than $200,000. This is in stark contrast with those in the middle fifth, with incomes averaging $51,500, who received an average of $1,090 a year -- about 1/70th the amount given the top 1 percent.

In addition, the richest 1 percent are paying a lower share of federal taxes in 2004 than in 2000, while those in the middle are paying a greater share. Moreover, these estimates likely understate the true tax cut at the top, since the CBO report did not include changes to the estate tax law -- which only affects millionaires.

Contrary to the administration's claims, not everyone is getting a tax cut. For millions of low-income taxpayers who pay only a payroll tax, there is no tax reduction.

Besides, for 2004, the Bush Administration is projecting a deficit of $445 billion. With a U.S. population of about 294 billion, that translates to about $1,500 per person. So the average household comes out significantly behind.

Finally, a host of other tax changes, particularly at the state level, were necessitated in part by the policy changes at the federal level. This has meant additional taxes, fees, tuition payments, and program cuts in other areas of government.

Given all of this, it should be no surprise that a recent poll found that a large majority, 71 percent of Americans, say they did not receive a tax cut, and a quarter of respondents said the administration made their taxes go up.

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