††††††††††††††††††††††† Double Taxation

 

30 April 2003 Washington, DC-

††††† In a previous article (Whose Tax Cut?), TheRealTruth revealed who will benefit the most from the tax rate changes in the Presidentís new tax plan. However, the tables obtained before reflected only the tax cuts due to a change in the tax bracket rates, including the elimination of the difference between single and married tax rates, sometimes called the marriage penalty tax. They did not include the other major tax cut, the elimination of taxes on stock dividends, sometimes called the double taxation of dividends. TheRealTruth has now obtained another CBO table, one which does include the effects of the elimination of taxes on dividends, and the differences are worth examination.

 

 

 

CBO 2002 Tax Revenue Estimates

 

†††††† AGI Limits ($)

Returns

Tax Rate

Revenue

Total Taxes

Lower

Upper

(thosands)

Current (%)

Current ($M)

Current (%)

0

10000

25755

-6.7

-8.63

-0.9

10000

20000

23602

-3.0

-10.62

-1.1

20000

30000

18644

3.8

17.71

1.8

30000

40000

13534

7.0

33.16

3.3

40000

50000

10307

9.0

41.74

4.1

50000

75000

17874

10.3

115.06

11.4

75000

100000

10224

12.3

110.04

10.9

100000

200000

9906

16.0

237.74

23.5

200000

500000

2395

23.0

192.80

19.1

500000

1000000

418

27.7

86.84

8.6

1000000

5000000

226

28.8

195.26

19.3

 

Total

132885

 

1011.11

100.0

 

††††† The elimination of taxes on stock dividends are expected to favor the rich and upper middle classes more than the poor and lower middle classes because the rich and upper middle class are more likely to own stocks.

 

 

 

How Tax Rate Changes Affect Your Taxes

 

†††††† AGI Limits ($)

Tax Rate

Revenue

Total Taxes

Average

Lower

Upper

Proposed (%)

Proposed ($M)

Proposed (%)

Change ($)

0

10000

-6.9

-8.89

-1.0

-10

10000

20000

-3.5

-12.39

-1.4

-75

20000

30000

3.0

13.98

1.5

-200

30000

40000

6.1

28.90

3.2

-315

40000

50000

8.0

37.11

4.1

-450

50000

75000

9.1

101.66

11.2

-750

75000

100000

10.4

93.04

10.3

-1663

100000

200000

14.3

212.48

23.4

-2550

200000

500000

21.6

181.06

20.0

-4900

500000

1000000

25.3

79.32

8.7

-18000

1000000

5000000

26.7

181.03

20.0

-63000

 

Total

 

907.29

100.0

 

 

 

The first table shows the CBOís estimate of 2002 tax revenues under the current tax laws; the second table shows what those tax revenues would have looked like under the proposed changes in tax brackets; and the new table shows what they would have looked like with the elimination of the tax on dividends included.These tables were supplied to TheRealTruth by sources in the Congressional Budget Office (CBO) who need to remain anonymous for obvious reasons.

††††† The first two tables, originally published in Whose Tax Cut? on April 15th, indicated that the Presidentís cut in tax rates favored neither the rich nor the poor.Although the dollar amount of the tax cuts differed significantly due to the differences in adjusted gross income (AGI), percentage-wise it left the tax burden largely unchanged, as evidenced by the percentage of total income taxes paid by each tax bracket.Before the tax rate change taxpayers earning more than $1,000,000 were paying 19.3% of the total income taxes while taxpayers in the $50,000-75,000 tax bracket were paying 11.4% and taxpayers in the $20,000-30,000 tax bracket were paying 1.8% of the total taxes.After the rate change they were paying 20%, 11.2%, and 1.5%, respectively, of the total.

 

 

 

 

How Total Tax Plan Affects Your Taxes

 

†††††† AGI Limits ($)

Tax Rate

Revenue

Total Taxes

Average

Lower

Upper

Proposed (%)

Proposed($M)

Proposed (%)

Change ($)

0

10000

-6.9

-8.89

-1.4

-10

10000

20000

-3.5

-12.39

-2.0

-75

20000

30000

3.0

13.98

2.2

-200

30000

40000

6.1

28.90

4.6

-315

40000

50000

7.9

36.64

5.9

-495

50000

75000

8.9

99.42

15.9

-875

75000

100000

9.3

83.20

13.3

-2625

100000

200000

10.5

156.02

25.0

-8250

200000

500000

11.3

94.72

15.2

-40950

500000

1000000

12.4

38.87

6.2

-114750

1000000

5000000

13.8

93.56

15.0

-450000

 

Total

 

624.04

100.0

 

 

 

††††† When the effects of the elimination of taxes on stock dividends is factored in, however, the new table shows a dramatic reduction in the percent of total income taxes paid by the rich and a sizable increase in the percent of total taxes paid by taxpayers in the lower and middle tax brackets.The same taxpayers above are now paying 15%, 15.9%, and 2.2%, respectively, of the total.

††† This is the Real Truth!