no class warfare required! http://online.wsj.com/article/SB114670305012743294.html?mod=opinion_main_commentaries -- How to Soak the Rich (the George Bush Way) By STEPHEN MOORE May 4, 2006; Page A14 With the House and Senate preparing to vote on extending George W. Bush's investment tax cuts, it's no surprise the cries against "tax giveaways to the rich" grow increasingly shrill. Just yesterday Senate Minority Leader Harry Reid charged that the Bush tax plan "offers next to nothing to average Americans while giving away the store to multi-millionaires" and then fumed that it will "do much more for ExxonMobil board members than it will do for ExxonMobil customers." Oh really. New IRS data released last month tell a very different story: In the aftermath of the Bush investment tax cuts, the federal income tax burden has substantially shifted onto the backs of the wealthy. Between 2002 and 2004, tax payments by those with adjusted gross incomes (AGI) of more than $200,000 a year, which is roughly 3% of taxpayers, increased by 19.4% -- more than double the 9.3% increase for all other taxpayers. Between 2001 and 2004 (the most recent data), the percentage of federal income taxes paid by those with $200,000 incomes and above has risen to 46.6% from 40.5%. In other words, out of every 100 Americans, the wealthiest three are now paying close to the same amount in taxes as the other 97 combined. The richest income group pays a larger share of the tax burden than at anytime in the last 30 years with the exception of the late 1990s -- right before the artificially inflated high tech bubble burst. Millionaires paid more, too. The tax share paid by Americans with an income above $1 million a year rose to 17.8% in 2003 from 16.9% in 2002, the year before the capital gains and dividend tax cuts. The most astounding result from the IRS data is the deluge of revenues from the very taxes that were cut in 2003: capital gains and dividends. As shown in the nearby chart, capital gains receipts from 2002-04 have climbed by 79% after the reduction in the tax rate from 20% to 15%. Dividend tax receipts are up 35% from 2002 to 2004, even though the taxable rate fell from 39.6% to 15%. This is as clear evidence of a Laffer Curve effect as one will find: Lower rates produced increased revenues. What explains this surge in tax revenues, especially at the high end of the income scale? The main factor at play here is the robust economic expansion, which has led to real income gains for most tax filers. Higher incomes mean higher tax payments. Between 2001 and 2004, the percentage of Americans with an income of more than $200,000 rose from 12.0% to 14.2%. The percentage of Americans earning more than $50,000 a year rose from 40.8% to 44.2% -- and that's just in two years. While these statistics are not inflation-adjusted by the IRS, price rises were relatively modest during these years, so adjusting wouldn't alter much. We can already hear the left objecting that the rich are paying more taxes simply because they have hoarded all the income gains, while the middle class and poor wallow in economic quicksand. But, again, the IRS data tell a more upbeat story of widespread financial gains for American families. The slice of the total income pie captured by the richest 1%, 5% and 10% of Americans is lower today than in the last years of the Clinton administration. So how can the media contort these statistics to conclude that the Bush tax cuts only benefited the affluent? The New York Times claims that the richest 0.1% got 5,000 times the tax benefit than those with less than $50,000 of income. That figure can only be true if one assumes that there were no economic benefits from the tax cuts whatsoever; and that lower taxes on income, capital gains and dividends resulted in no changes in the real economy -- not the value of stocks, not business spending, not employment, not capital flows into the U.S., not corporate dividend payments, not venture capital funding -- nothing. The underlying assumption of this static analysis is that tax cuts don't work and that incentives don't matter. Of course, in the real world, financial incentives through tax policy changes matter a great deal in altering economic behavior. And we now have the evidence to confirm that the latest round of tax cuts worked -- five million new jobs, a 25% increase in business spending, 4% real economic growth for three years and a $4 trillion gain in net wealth. So now the very class-warfare groups who, three years ago, swore that the tax cuts would tank the economy rather than revive it, pretend that this robust expansion would have happened without the investment tax cuts. Many Democrats on Capitol Hill recite this fairy tale over and over. One final footnote to this story: Just last week, the Department of the Treasury released its tax receipt data for March 2006. Tax collections for the past 12 months have exploded by 14.4%. We are now on course for a two-year increase in tax revenues of at least $500 billion, the largest two-year increase in tax revenue collections after adjusting for inflation ever recorded. So why are the leftists complaining so much? George Bush's tax rate cuts have been among the most successful policies to soak the rich in American history. Mr. Moore is a member of The Wall Street Journal's editorial board.
This guy has an interesting take on inflation. Can someone tell me how 10 percent more people both making over 50K a year and 200K year not cause inflation?
I don't even understand the point of this article other than to make .1% of Americans feel less guilty, as if anybody cares what it says anyway.
depends on what you're focused on gross recepits, or percentage paid by the rich. Bush gives you two-two for the price of one.
He gives us inflation which causes GDP, and thus gross receipts, to be higher in 2006 than in 1999? Funny, and here I was thinking the business cycle had something to do with the global economy.
The point of the article...Good read...I still think someone will say we tax the rich too much, but why penalize a guy/gal for making more than the avg. american...even 10% of $1MM is $100K and that is a lot of revenue for the Govt.
I wouldn't say someone making over $200K was "rich," but upper middle class, as long as you were talking about between 200 & 300-350K. That's my opinion, anyway. When you look at how many professionals in a 2 income family are working these days, and combine that with the lower value of the dollar, relative to the 1980's, when our tax code was dramatically changed, that isn't rich. In comparison to many Americans, it may seem so, but it's not. The people making income above that quickly rise to 7 figures and beyond, and they are the ones raking it in from Bush Administration/GOP tax policies. Those in the range I'm talking about (and those immediately below that) are hit with the alternative tax, many of them, so they are getting taxed more than some may think. Keep D&D Civil.
the $200k figure figured prominently in Kerry's tax plan in 2004. according to the democratic party, that's rich.
I am the Democratic Party, by your definition, I didn't vote for Kerry in the primaries, and I don't consider it rich, so there!! Keep D&D Civil.
I've read a lot of dumb things on this board, but this might be the dumbest. Perhaps the reason capital gains receipts increased from 2002 to 2004 is that in 2002, the stock market was going DOWN, while in 2003-04, it was going UP. Capital gains don't come when people are primarily taking losses. Stupidity like this makes everything else in this article fairly suspect, although it sounds reasonable on a surface analysis.
The only thing stupid here is your inability to recognize that the tax cuts were part of the reason the stock market was going "UP". Reduced taxes on dividends and capital gains provides incentives for companies to manage their capital structure more efficiently, in addition to providing more money in the pockets of investors since they are not paying as much in capital gains/dividend taxes. That in turn leads to more consumer spending on goods and services, which in turn improves companies' financials and ultimately their stock price. The only surface analysis performed was your own. You need to dig deeper in the future.
Was tax cut also part of the reason the stock market crashed on the "Black Monday" in Reagan era? Can't have both way, no?
Just having taxcut is fine and I would support that. Why the taxcut and massive spending at the same time? If they are not spening like crazy in Washington we wouldn't need this much tax!
Can you please improve your English when responding to my posts? "Can't both way, no"? Pat, I'd like to buy a verb. That doesn't make any sense. "Was tax cut" I'll take nouns that should be plural for $100, Alex. "in Reagan era" I'd like to buy an article, Pat.
Please provide ANY evidence of a causal connection. The stock market went up after Clinton tax cuts as well, and went down during past tax cuts. Correlation and causation are not the same, and there is nothing but conjecture in your post. Past studies have consistently showed little correlation between taxes and market growth over the long-term. Nice try, though.
"Clinton tax cuts" obviously should be tax increases. Stock market also rose during Bush Sr. tax increases.
Post or posts? Big boy? The verb is there. Check it again. Slow response on your part. Hey Rice grad, the singular form is perfectly acceptable. Here's an example by The Tax Foundation: http://www.taxfoundation.org/news/show/163.html Hmm, is that a properly constructed sentense? Maybe you need to improve your English, huh?
