Since the passage of the 2001 and 2003 tax cuts, critics have claimed incessantly that they disproportionately benefited the rich while burdening the poor. Now that the data is in, these claims have been shown to be unquestionably false.
Squeezing the Wealthy Even More
According to a report issued by the Congressional Budget Office (CBO), the tax cuts significantly increased the share of federal income taxes paid by the highest-earning 20 percent of households compared to their levels in 2000, President Clinton’s final year in office.
In 2006, the latest available year from CBO, the top 20 percent of income earners paid 86.3 percent of all federal income taxes, an all-time high.
The chart's a bit small here, but what it tells us is that between 2000 and 2006, the percent of taxes paid by the top 20% of all wage earners went up, from 81.2% to 86.3, while the percentage share for the remaining 80% of all citizens went down - and more people started getting kickbacks, as the 20-40% quintile actually stopped paying taxes and started getting refunds taken out of the pockets of those evil rich folks.
Heritage offers some sanity:
To stop the shifting of the tax burden to a dwindling number of taxpayers, Congress should:
- Make the 2001 and 2003 tax cuts permanent for all taxpayers, not just those making under $250,000. This would slow the shifting of the burden to the top 20 percent.
- Stop creating and expanding refundable credits. Welfare spending and subsidies to low-income earners should be done through traditional spending programs, not hidden in the tax code. This would stop a growing portion of the population from being removed from the tax roles.
- Cut top tax rates to return the shares of income taxes paid by each quintile to their more-sustainable 2000 levels.
Couldn't agree more!
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