April 23, 2004

Dubya dances with the ones that brung him.

The verdict is in on the first three years of Dubya's tax cuts and, to no one's surprise, it's the wealthy in the US who are getting most of the tax cuts.

In a detailed analysis of the tax cuts, the Center on Budget and Policy Priorities found that almost 25 percent of the benefits of Dubya's tax cuts are going to just one percent of US households. This year, those high-income households can expect an average tax cut of US $35,000. This is 54 times the average tax cut that the middle fifth of US households will receive (US $647). And if your household makes over US $1 million per year, the news is even better: the tax cuts for this group average US $123, 600.

Besides the inherent unfairness of delivering 'tax relief' to those who least need a tax cut, the tax windfalls are coming at a time when the top one percent of US huseholds were already benefitting from huge income increases over the 1980s and 1990s. According to Congressional Budget Office figures, the average after-tax income of the top one percent of the population more than doubled between 1979 and 2001, rising from US $294,300 to $703,100 (after adjusting both figures for inflation).

Households in the middle and bottom fifths of the population did nowhere near as well. The average after-tax income of households in the middle fifth rose by only 17 percent (US $6300) between 1979 and 2001. Incomes for ouseholds in the bottom fifth rose only 8 percent (US $1,100).

A major irony of the tax cuts is their cost. The CBPP found that most of this cost went toward delivering benefits to upper-income taxpayers, despite Dubya's characterization of the tax cuts as providing 'relief' to people in the middle income brackets. If the administration had only provided tax cuts to middle and lower income households, the cost of the tax cuts would have slashed by two-thirds. But then the people who Dubya is beholden to wouldn't have gotten the tax goodies they believe they deserve.

There's a whole lot more in the CBPP report than we can include in this post. The CBPP's press release for the report is here. You'll find the full report here.

Posted by Magpie at April 23, 2004 08:36 PM | Economy | Technorati links |