Double Taxation
In a previous article (Whose Tax Cut?), TheRealTruth revealed who will
benefit the most from the tax rate changes in the President’s 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.
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How Tax Rate Changes
Affect Your Taxes |
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||
|
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 CBO’s 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 President’s 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 $20,000-30,000 tax bracket were paying 1.8% of the total
taxes. After the rate change they were
paying 20%, 11.2%, and 1.5%, respectively, of the total.
|
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|
How Total Tax Plan Affects Your Taxes |
|
|||||
|
AGI Limits ($) |
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!