NCPA - National Center for Policy Analysis

Distribution Of Tax Cuts And Tax Burdens

October 9, 2000

In the first debate with George W. Bush, Al Gore claimed the top 1 percent of taxpayers -- those with incomes above $319,000 -- would receive 42.6 percent of the total tax cut. Gore got this figure from the liberal Citizens for Tax Justice.

But one should also look at the distribution of the tax burden. According to the latest data published by Congress's Joint Committee on Taxation:

  • Those making more than $200,000 will pay 42.7 percent of all federal income taxes this year.
  • Those making more than $100,000 will pay two-thirds of all income taxes, and those making more than $50,000 will pay 92.5 percent.
  • The top 1 percent of taxpayers will pay 33.6 percent of all federal income taxes, the top 5 percent will pay 54 percent, and the top 10 percent will pay 66.4 percent.

And due to the Earned Income Tax Credit, which is refundable even for those who have no tax liability, 35 million or 80 percent of the 43.6 million tax filers with incomes below $20,000 pay no income taxes.

In the October/November issue of American Enterprise, economist Kevin Hassett points out that real growth in incomes is pushing taxpayers into higher tax brackets. There are 3.7 percent fewer taxpayers in the 15 percent bracket now than at the beginning of the Clinton Administration. They are now in the 28 percent bracket and higher. If this trend continues, the percentage of taxpayers in the 15 percent bracket will fall from 64.3 percent in 1993 to just 46.6 percent by 2010.

Over the next 10 years this real bracket creep will raise federal taxes by $1.3 trillion, estimates Hassett -- exactly the "cost" of the Bush plan. Therefore, Bush can argue he is not really cutting taxes, he is just keeping them from rising.

Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, October 9, 2000.

For JCT study:

For CTJ study:


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