January 07, 2005

A Myth Debunked: Bush Tax Cuts Did Not Favor the Rich

From the National Review Online:

...newly released IRS data refute the charge that the Bush tax cuts favored “the rich” and instead show that all income groups benefited from the reforms.

...New IRS data for the 2002 tax year … provide a window into the effects of the initial Bush tax cuts on taxpayers, broken down by income. The results clearly show the across-the-board nature of the tax reductions and refute claims that the changes benefited higher-income taxpayers to the detriment of lower-income households.

...the average rate of taxation for those earning under $75,000 dropped by 2.1 percentage points between 2000 and 2002, while the rate for those earning $75,000 or more declined by only 1.6 percentage points.

... [For households making $200,000 or more, the] average rate of taxation was practically unchanged at 30 percent in 2002 compared with 29.9 percent in 2000.

The first round of Bush tax cuts thus was unquestionably equitable. ...it still managed to spread the benefits of lower tax rates to all income groups in roughly equal measure.

The talking point of the Left that Bush’s tax cuts favored the rich appears to have been incorrect. There were no tax cuts on those earning over $200,000 a year. They paid an average of 29.9% in 2000, and in 2002, after the GWB tax cuts, they paid an average of 30%.

For those earning more than $75,000 a year—they got a tax cut, but it was a lower one than the tax cut for those earning less than $75,000. Those earning less than $75,000 got an average break of 2.1 percentage points, while those earning more got an average break of only 1.6 percentage points.

Update: 1-12-05. Welcome, Carnival of the Vanities readers! This site is proud to have this article included in the latest Carnival of the Vanities, hosted this week by MultipleMentality.