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December 19, 2005

Right-Wing Class War

Ah. Distributional implications of current tax-cut packages:

Senate Finance and House Ways and Means Reconciliation Tax-Cut Packages Flawed, Rev 11/29/05: Who Benefits from the House and Senate Tax-Cut Packages?... Both the House Ways and Means Committee and the Senate tax-cut packages would primarily benefit upper-income taxpayers. Under both bills, more than three-quarters of the gains from the major provisions in the bill would go to people with incomes over $100,000 a year.... [T]he House package is substantially more skewed to the very highest-income taxpayers than the Senate measure. Some... 40 percent of the benefits of the Ways and Means Committee package would go to people with incomes [of a million dollars a year or more].... The primary reason for the House measure’s far more skewed distribution is that it extends capital gains and dividend tax cuts but not AMT relief....

The House bill’s concentration of tax-cut benefits among households with incomes over $1 million undercuts the claims of many supporters of capital gains and dividend tax cuts who have misleadingly sought to characterize these tax cuts as providing benefits that are widely distributed. Those making these claims point to the number of taxpayers who receive a benefit of any amount from the capital gains and dividend tax cuts. These claims ignore the fact that many of the middle-income taxpayers who are affected receive very small tax-cut benefits while a highly disproportionate share of the benefits go to households at extremely high income levels.... [A]bout 26 million households will receive some benefit from the extension of capital gains and dividend tax cuts in 2009, or about 17 percent of all households.... [But] households with income of less than $50,000 would receive an average tax cut in 2009 of less than $11 from the capital gains and dividend measures, according to the Tax Policy Center. Households with incomes of less than $100,000 would receive an average tax cut of $29. In contrast, the average tax cut for households with income of more than $1 million would be $32,000 in 2009...

Posted by DeLong at December 19, 2005 12:28 PM