The Radical Republican Agenda on Taxes

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.