CBO Study Shows Bush Tax Cuts Have Shifted Burden To Middle Class

by Leroy Baker, Tax-News.com, New York

16 August 2004

President Bush's tax cuts have transferred the federal tax burden from the richest Americans to middle-class families, a report by the Congressional Budget Office has revealed.

The CBO study found that the wealthiest 20% saw their share of federal taxes drop from 64.4% of total tax payments in 2001 to 63.5% this year. The top 1%, earning an average $1.1 million, saw their share fall to 20.1% of the total, from 22.2%.

Over that same period, taxpayers with incomes from around $51,500 to around $75,600 saw their share of federal tax payments increase. For instance, the report revealed that households earning around $75,600 saw their share jump the most, from 18.7% of all taxes to 19.5%.

Meanwhile, the study found that the effective federal tax rate of the top 1% of taxpayers has fallen from 33.4% to 26.7%, an effective decline of 20%. By comparison, the middle 20% of taxpayers - whose incomes averaged $51,500 in 2001 - saw their tax rates drop 9.3%, whilst the poorest taxpayers saw their taxes fall 16%.

The findings of the Democrat-requested study are likely to be hotly disputed by the Bush re-election campaign team. However, observers point out that the study’s conclusions will be lent a significant amount of credibility by the fact that the non-partisan CBO is headed by the former chief economist of Bush's Council of Economic Advisers, Douglas Holtz-Eakin.

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