Here's and excellent slide show on taxes and tax rates. Business Insider
The Radical Republican Agenda on Taxes. A major contributor to the increasing inequality in America has been tax cuts for the wealthy. This trend started even before Reagan and has accelerated again under Bush II. But it's also important to look at what taxes have been cut to understand what's at stake.
Next Steps in the Radical Republican Agenda Bush is headed towards a radical revision of who pays taxes and how much they pay, where labor is taxed but not capital, social services are cut and the federal government shrinks in size.
Who Benefits? Cutting the Tax Rates
It cost the rich a lot to elect Bush, but they've already recouped a lot of their investment. The big cuts were for millionaires.
The Effect of the Tax Cuts
The tax cuts cause trouble now but their long-term effect is even more damaging.
Even before the recent tax cuts, incomes were growing fastest at the top of the income scale. Beginning with Reagan, the series of Republican tax cuts has over-whelmingly benefitted the rich.
"An April 2004 CBO study showed that between 1979 and 2001 (the last year CBO examined), the average after-tax income of the top one percent of households rose by 139 percent ($409,000) after adjusting for inflation, compared to a 17-percent ($6,300) increase for the middle fifth of households and an 8-percent ($1,100) increase for the bottom fifth." Full Story.
The magnitude of the income tax cuts and the change in tax rates under the Reagan-Bush-Bush regimes is important but there is more to the story. It's also important to look at what taxes have already been cut: capital gains tax rates; taxes on dividend income; repeal of the estate tax in 2010; increased business depreciation schedules etc. Each of these changes favors those with investment income over those with labor income, thus magnifying the effect of the reduction of income tax rates.
The conservative economists who advise Bush want more than just more tax cuts. And the press is missing the story.
"When the President pledges to create an “era of ownership,” he is not talking merely about encouraging people to buy their own homes and start small businesses. To conservative Republicans who understand his coded language, he is also talking about extending and expanding the tax cuts he introduced in his first term; he is talking about allowing wealthy Americans to shelter much of their income from the I.R.S.; about using the tax code to curtail the government’s role in health care and retirement saving; and, ultimately, about a vision that has entranced but eluded conservatives for decades: the abolition of the graduated income tax and its replacement with a levy that is simpler, flatter, and more favorable to rich people." Full Story.
Tax Cuts: Who Benefits and Who Pays For Them
The American people have been told that Bush's tax cuts will "give people their money back." But this report shows that each year these cuts save less than $1,000 for households making less than $50,000, but save $136,000 for households making more than $1 million. Link to PDF
Tax Cuts Decrease Federal Revenue by $1.7 trillion
Making the 2001, 2002, and 2003 tax cuts permanent would reduce revenues by $1.7 trillion through 2014. If we include the added interest payment to national debt, this figure rises to $2.0 trillion. Tax revenues pay for programs like health care, education and national security. So in order to finance this loss in tax revenue, we have two choices: 1) cut social spending or 2) increase the national debt. Link to Brookings Fact Sheet
Making Tax Cuts Permanent would cost $2.5 trillion from 2005-2014
Making tax cuts permanent would cost $2.5 trillion from 2005-2014 and more than twice that amount from 2015-2024. Link to PDF
Auerbach 2002 Bush Tax Cut (145k PDF)
Promoters said that Tax Cut I that gave the wealthy more tax breaks in retirement plans would increase national savings. But no... analysis shows that like most tax cuts this one in reality will increase spending and reduce national savings. PDF
1. "G.E.'s Strategies Let It Avoid Taxes All Together," The New York Times, March 24, 2011 http://www.moveon.org/r?r=207259&id=26713-2958099-wlhWCLx&t=3
3. "After Paying Zero Income Taxes, GE Plans To Ask Its Union Workers To Make Wage and Benefits Concessions", ThinkProgress, March 28, 2011 http://www.moveon.org/r?r=207260&id=26713-2958099-wlhWCLx&t=5
4. "UPDATE: GE Doubles CEO Immelt's Compensation, Shrinks Board", Smart Money, March 14, 2011 http://www.moveon.org/r?r=207261&id=26713-2958099-wlhWCLx&t=6
5. "G.E.'s Strategies Let It Avoid Taxes All Together," The New York Times, March 24, 2011 http://www.moveon.org/r?r=207259&id=26713-2958099-wlhWCLx&t=7
6. "NACHC Statement in Response to the Budget from the House Appropriations Committee," National Association of Community Health Centers website, February 9, 2011 http://www.moveon.org/r?r=206514&id=26713-2958099-wlhWCLx&t=8
7. "Bye Bye, Big Bird. Hello, E. Coli.," The New Republic, February 12, 2011 http://www.moveon.org/r?r=206104&id=26713-2958099-wlhWCLx&t=9
8. Based on an annual teacher's salary of $42,500, as noted in the Payscale website (updated March 19, 2011), accessed March 30, 2011 http://www.moveon.org/r?r=207263&id=26713-2958099-wlhWCLx&t=10