Rich Taxpayers To Benefit Most From Bush Tax Cuts

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

16 July 2002

Citing the results of a Tax Policy Center analysis of the effects of President Bush's $1.35 trillion tax cut program, New York Times reporter, David Cay Johnston revealed at the weekend that, whichever way you look at it, rich US taxpayers stand to benefit most from the reforms.

The recently published Tax Policy Center report looked at increases in income available for spending after taxes - across the spectrum - in 2010, and found that taxpayers earning $10,000 or under per year will receive just 98 cents extra per week, affluent taxpayers (earning between $100,000 and $200,000 annually) will receive an additional $32 to spend per week, and the very rich (bringing in $200,000 per year or more) will benefit most, ending with an extra $127 per week to spend in 2010.

Examining future policy questions, the Tax Policy Center report observed that: 'Many of EGTRRA's [Economic Growth and Tax Relief Reconciliation Act of 2001] provisions fade in very slowly, making the law's overall effect on the tax system difficult to predict. The sunset provision also makes future tax burdens uncertain.'

The research organization suggested that the government should look at extending the Alternative Minimum Tax relief measure, which sunsets before the rest of the Act, in 2004, although it admitted that: 'an AMT fix is also problematic because it would cost hundreds of billions of dollars', citing an Urban Institute report on the AMT as evidence of this.

The report also urged the government to 'reassess the unnecessary complexity facing lower income families when they prepare their taxes,' explaining that: 'EGTRRA did simplify the EITC [Earned Income Tax Credit]. But it missed an opportunity to simplify the complicated refundable child tax credit; indeed, it made computing the credit more complex.'

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