††††††††††††††††††††††† Who Got What!

 

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. In a follow-up article (Double Taxation!), we showed how adding the elimination of the tax on dividends to the tax plan primarily benefited the upper middle class and the rich. However, after considerable debate and extensive negotiations, the final tax cut passed by Congress did not totally eliminate the tax on dividends.Congress, concerned over the looming budget deficit, was forced to scale back the size of the dividend cut to about half of what the President had proposed.TheRealTruth has now obtained another CBO table, one that reflects the effects of the final tax bill. The differences, before and after, are worth studying just to see who really got what from the tax cuts.

 

 

 

 

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 reduction of taxes on stock dividends still favored 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.The first table shows the CBOís estimate of 2002 tax revenues under the old tax law; the second table shows what those tax revenues look like under the changes in tax rates only; and the new table shows what they look like with the reduction 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.

 

 

 

 

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 two tables, originally published in Whose Tax Cut? on April 15th, indicate 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 significant 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 tax rate changes they were paying 20%, 11.2%, and 1.5%, respectively, of the total taxes.

 

 

 

 

How Final 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

-1.2

-10

10000

20000

-3.5

-12.39

-1.6

-75

20000

30000

3.0

13.98

1.8

-200

30000

40000

6.1

28.90

3.8

-315

40000

50000

7.9

36.64

4.8

-495

50000

75000

9.0

100.54

13.2

-812

75000

100000

9.8

87.67

11.5

-2188

100000

200000

12.3

182.77

24.0

-5550

200000

500000

16.8

140.83

18.5

-21700

500000

1000000

18.4

57.68

7.6

-69750

1000000

5000000

19.5

132.21

17.4

-279000

 

Total

 

759.94

100.0

 

 

 

††††† When the effects of the reduction of taxes on stock dividends is factored in, however, the new CBO table shows a significant reduction in the percent of total income taxes paid by the rich with a corresponding increase in the percent of total taxes paid by taxpayers in the middle tax brackets and a slight decrease in the percent of total taxes at the lowest tax brackets.While before the tax changes the above taxpayers were paying 19.3%, 11.4%, and 1.8%, respectively, of the total taxes, those same taxpayers are now paying 17.4%, 13.2%, and 1.8%, respectively, of the total taxes.So, in a new twist to the old saying, the rich got richer, but it was not the poor that got poorer.It was the middle class.

††† This is the Real Truth!