NCPA - National Center for Policy Analysis

BUSH TAX CUTS MAKE TAX CODE MORE PROGRESSIVE

November 15, 2004

Opponents of the Bush tax cuts say that they favor the rich. Steven E. Landsburg, however, argues that the opposite is true: the Bush tax cuts have favored the middle class and poor more than the rich. In fact, he contends that the tax code is more progressive because of them.

Landsburg analyzes the effects of the Bush income tax cut and notes that the non-rich received big tax cuts. Focusing on income taxes only, he finds:

  • A married couple had a taxable income of $20,000 to $60,000 received an income tax cut of 24 percent.
  • In contrast, a married couple that made $350,000 received a tax cut of only 12.5 percent, while those making $1 million got an even smaller cut.
  • Pre-Bush, the $1 million a year couple paid 33 times as much as the $60,000 people; today they pay more than 38 times as much.

When including all the Bush tax cuts on capital gains, dividends, inheritance and boosts to child-care tax credits, the poor still benefit most. According to Landsburg:

  • The biggest percentage tax cut -- about 17.6 percent -- went to taxpayers in the second-lowest quintile (lower middle class).
  • The middle class received a tax cut of 12.6 percent, while the upper middle class received a tax cut of 9.9 percent.
  • The richest quintile received a slightly larger tax cut of 12.7 percent.

So, the Bush tax cuts have made the tax code more progressive.

Source: Steven E. Landsburg, "Bush's Tax Cuts are Unfair...To the rich," www.slate.msn.com, October 21, 2004.

 

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