Kennedy Tax Cut Helped The Rich
March 19, 2001
The tax cut proposed by President Kennedy in 1963, enacted in 1964 after his death, was as much of a tax cut for the rich as President Bush's.
In 1963, Kennedy asked Congress to reduce all statutory income tax rates -- reducing the top income tax rate from 91 percent to 65 percent, down to a bottom tax rate cut from 20 percent to 14 percent. In 1964, a Democratic Congress reduced the top rate to 70 percent. This was a significantly larger tax cut than Bush's proposal to cut the top rate from 39.6 percent to 33 percent -- a 23 percent cut in the top rate, compared to 17 percent for Bush.
- In fact, the largest reduction went to those with adjusted gross incomes between $50,000 and $100,000 -- equivalent to $300,000 to $600,000 today.
- People in this bracket got a tax cut equal to 4.3 percent of their income, and those at the top of the income distribution, with incomes over $1 million, equal to $6 million today, got a tax cut of 3 percent.
- By contrast, those at the bottom of the distribution, with annual incomes below $5,000, saved only 2.5 percent.
However, the threshold for the top 1 percent by income in 1962 is not equivalent to the threshold for the top 1 percent today, which is $300,000 in adjusted gross income.
- While an income of $50,000 in 1962 is equivalent to $300,000 today, that $50,000 put one into the top 0.2 percent income class in 1962; that is, the top two-tenths of 1 percent.
- To be in the top 1 percent in 1962, one only needed an income of $25,000.
- Those with incomes above this level got 14 percent of the Kennedy tax cut (see figure).
Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, March 19, 2001.
Browse more articles on Tax and Spending Issues