Biggest investment tax cuts went to the richest

RAW STORY
Published: Tuesday April 4, 2006

The benefits of President Bush's investment tax cuts were "far more concentrated on the very wealthiest Americans," according to an analysis of Internal Revenue Service data conducted by the New York Times and slated for the front page of Wednesday's edition.

This is in contrast to two earlier tax cuts which were more evenly distributed among the population.

Excerpts from the forthcoming article written by David Cay Johnston:

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The first data to document the effect of President Bush's tax cuts for investment income show that they have significantly lowered the tax burden on the richest Americans, reducing taxes on incomes of more than $20 million by $500,000 on average.

An analysis of Internal Revenue Service data by The New York Times found that the benefit of the lower taxes on investments was far more concentrated on the very wealthiest Americans than the benefits of Bush's two previous tax cuts, on wages and other noninvestment income.

When Congress cut investment taxes three years ago, it was clear that the highest-income Americans would gain the most, because they had the most money in investments. But the size of the cuts and what share went to each income group have not been known.

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Americans with annual incomes of $2 million or more, about one-tenth of 1 percent of all taxpayers, reaped 43 percent of all the savings on investment taxes in 2003. The savings for these taxpayers averaged about $41,400 each. By comparison, these same Americans received less than 10 percent of the savings from the other Bush tax cuts, which applied primarily to wages, though that share is expected to grow in coming years.

The savings from the investment tax cuts are expected to be larger in subsequent years because of gains in the stock market.

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