Tax cut just $60 for many in Bush plan -analysts
Reuters, 01.07.03, 9:03 PM ET
By Jonathan Nicholson
WASHINGTON, Jan 7 (Reuters) -
Taxpayers earning $30,000 or less a
year would get an average annual tax
cut of just $60 from the Bush economic
plan unveiled on Tuesday, while those
making more than $200,000 would get
a tax break of more than $12,000,
according to analysts.
"There's no question it's weighted
toward the wealthy," said Max Sawicky,
senior economist with the Economic
Policy Institute, a liberal
Washington-based think tank.
Sawicky based his calculations on
official estimates released by the Bush
administration on the distribution of
planned tax cuts in the president's $674
billion 10-year economic package.
To counter political charges the
program is skewed toward the rich, the
administration has been touting a
different figure, that 92 million U.S.
taxpayers would receive an average
annual tax cut of about $1,083.
And, according to Treasury's table
released with other plan details on
Tuesday, taxpayers making $30,000 or
less would see a 17 percent decrease
in their tax bills, while those making
between $30,000 and $40,000 would
see a 20 percent decline. Those with
annual incomes of $200,000 and over
would see the smallest percentage
drop in their taxes -- 11.2 percent.
GROUPING "AGGRESSIVELY"
But Sawicky and Len Burman, co-director of the Urban-Brookings Tax Policy Center, said Treasury's
table was in many ways misleading.
"They do combine groups pretty aggressively," said Burman, deputy assistant Treasury secretary of tax
analysis from 1998 to 2000 in the Clinton administration.
For example, the table breaks up taxpayers into seven income classes, ranging from $0 to $30,000
annually to $200,000 and above. But it does not list how many taxpayers are in each class.
Burman estimated almost 40 percent of taxpayers fall into the $30,000 and under income group on
Treasury's table. Less than 5 percent of taxpayers would fall into the $200,000 and above income level,
he said.
The average size of the tax cut, according to Sawicky using the Treasury table, would be about $60 for
those in the $30,000 and lower income group but $12,496 for those in the 200,000 and higher income
level.
For those making between $50,000 and $75,000, the average cut would be $553, Sawicky said. The
average tax break would only cross the $1,000 barrier in the next grouping, $75,000 to $100,000.
Taxpayers in that group would get an average break of about $1,130, he said.
INCOME MEASURES
The table also used 2000 income levels, when more up-to-date data was likely available, Burman said.
To measure income, Treasury's table also used cash income, a methodology that includes employer
contributions for payroll taxes and the federal corporate income tax.
In the Clinton administration, tax distribution tables were compiled by cash income as well as a
method called Family Economic Income, Burman said. Another method, used by the Tax Policy Center,
is to use adjusted gross income, as defined by the Internal Revenue Service.
Burman said the Treasury table did little to alter his own estimate that 28 percent of the package's
benefits would go to the top 1 percent of taxpayers, as determined by AGI, or that the lowest one-fifth of
taxpayers would get 0.1 percent of the benefits.
Copyright 2003, Reuters News Service |
