NCPA - National Center for Policy Analysis

The Truth About Who Benefits From Bush's Tax Cuts

October 16, 2000

Would George W. Bush's tax plan give "almost half" its total benefits to the top 1 percent of taxpayers?

Distributional analyses of tax proposals estimate the average impact on a large group of taxpayers by income. However, the income data is "adjusted" so that it bears no relationship to the Adjusted Gross Income (AGI) reported on tax returns and makes all taxpayers appear richer than they are.

  • A 1987 Treasury study found its income measure tripled the percentage making more than $50,000 and reduced the number making $10,000 or less by 80 percent.
  • It also increased the aggregate income of those making over $50,000 by 40 percent.

And when Citizens for Tax Justice (CTJ) says 42.6 percent of the Bush tax cut goes to the top 1 percent, that income level is probably 25 percent higher than the comparable level of AGI. By AGI, the top 1 percent get closer to 30 percent of the tax cut. Furthermore, the CTJ doesn't compare the cuts to how much taxes people pay currently.

  • According to the JCT, those making more than $100,000 per year pay 52.5 percent of all federal taxes while earning just 40.6 percent of total income (see figure).
  • This group would get 51 percent of Bush's tax cut and pay 52.6 percent of all taxes after the tax cut.
  • Those making between $30,000 and $100,000 make 47 percent of all income, pay 42.3 percent of all taxes and would get 44.1 percent of the Bush tax cut.
  • They would pay 42.2 percent of all taxes after the tax cut.

Taxpayers would benefit from Bush's tax plan roughly in proportion to the taxes they pay. In fact, the JCT data show the distribution of federal taxes is almost exactly the same before and after the Bush tax cut.

Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, October 16, 2000.


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