The rich. The poor. No one. Everyone.
You do the math. Everybody else is.
A discussion on the value of tax cuts and just which group of taxpayers benefits the most from them seems fitting since this week marks the five-year anniversary of the Bush Administration's last major round of tax tweaking.
On May 28, 2003, Dubya signed the Jobs and Growth Tax Relief Reconciliation Act into law. This measure lowered rates on capital gains and dividends and was part two of his tax-break push.
In 2001, the then-new prez made a splash by getting the Economic Growth and Tax Relief Reconciliation Act into law. Among other things, it created the 10 percent tax bracket (remember the rebates that went out for that?), eased the marriage tax penalty somewhat and widened the other income tax brackets.
In the ensuing years, additional tax measures, all with catchy names -- the Working Families Tax Relief Act of 2004, the American Jobs Creation Act of 2004, the Tax Increase Prevention and Reconciliation Act of 2005, the Pension Protection Act of 2006, and the Economic Stimulus Act of 2008 -- have been enacted.
To celebrate these laws, the Treasury department issued a press release, as well as two reports (PDF format) extolling the virtues of the tax law changes that began in 2001 and will be in effect for a few more years:
As expected, all's good with these tax measures in the Administration's view.
Rich man, poor man: But not everyone agrees with Dubya and the Treasury Department analysts.
Citizens for Tax Justice this month released its findings that under the current tax regime the poor pay more, or at least get fewer benefits. According to the CTJ report, the richest reap the most tax rewards.
The nonprofit group evaluated state-by-state data to find out how the benefits of the capital gains and dividends tax breaks are distributed among different income groups. It also examined available data on the revenue collected to see if revenues can actually increase in response to a tax cut.
CTJ researchers found that:
- The majority of the benefits of these tax cuts go to the richest one percent in every state.
- Revenue collected by the capital gains tax was much higher during the Clinton administration, when the tax rate on capital gains was higher.
Not so says Meg at All Financial Matters. In her post Bush's tax cuts for the "rich" actually favor the poor, she says:
It really bugs me when people in the media and (increasingly) in everyday conversation insist on mentioning Bush’s "tax cuts for the rich." People throw that phrase around a LOT (usually as evidence that Republicans are evil and Democrats are pure goodness), but I've found that few actually have any idea what tax cuts they are referring to and what taxes were like before the infamous cuts.
To be honest, I didn't either. So I did some research; allow me to enlighten those brave souls who insist on arguing about such matters at cocktail parties.
Although the hubby and I have benefited from the tax cuts over the last few years, my gut feelings, as well as my personal social and political philosophies, land me more in the CTJ camp.
But, hey, this is America, land of the free if not tax-free. So I'm now going to step back and let both sides start throwing tax policy brickbats at each other. Have fun!