NCPA - National Center for Policy Analysis

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.


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