IRS Data Shows High-Income Americans Pay More Than Fair Share
(CNSNews.com) - The Bush economic stimulus plan, which would end double taxation on dividend income and expand tax breaks for small businesses, is being labeled by congressional Democrats as a giveaway to rich taxpayers.
However, according to IRS data, published by the Tax Foundation, high-income earners have been paying more than their fair share of taxes. In 2000, according to the IRS data, the top 25 percent of earners made 67.3 percent of the nation's income but also bore 84 percent of the federal income tax burden.
The top ten percent of earners paid 67.3 percent of the income tax burden, while the top one percent of earners paid 37.4 percent of income taxes in 2000, the IRS data shows.
Many Democrats try to flip the argument, insisting that it unfair for the top earners to benefit from the president's plan.
"The top one percent of the people in this country earn 25 percent of the income but they will get 32 percent of the president's proposed tax cuts," said Sen. Byron Dorgan (D-N.D.), speaking at a Friday Capitol Hill press conference. "That's not fair," he said.
"What [the Bush plan] really is, is an obscene catering to the greed of the super rich in this country," said Sen. Mark Dayton, a Minnesota Democrat.
"We now see that what the president calls 'compassionate conservatism' is limited to millionaires and multimillionaires," said Dayton. "No administration in our history has ever been so compassionate to the very rich."
"It is quite clear that a high percentage of the benefits of the ... dividend exclusion go to the very high end folks," said New Jersey Democrat Jon Corzine.
"There's no class warfare," Corzine insisted. "The wealthy do very well when we have a rapidly growing economy; [but] the policies we have in place have done nothing but deteriorate values in the stock market, have done nothing but actually create hardship on all sectors of the American economy."
Vice President Dick Cheney, in a Friday speech before the U.S. Chamber of Commerce, defended the Bush stimulus plan.
"Critics have suggested that ending the double taxation of dividends is somehow tilted toward a small number of wealthy beneficiaries [but] the fact is that 54 million Americans own stocks that pay dividends," said Cheney.
"Moreover, 45 percent of all dividend recipients make under $50,000 per year," said Cheney.
Between the dividend tax cut and acceleration of the 2001 tax cuts, "The president has proposed a plan that benefits all Americans," Cheney insisted.
Taxpayers with incomes of $200,000 or more would receive an average cut of 11.2 percent in 2003; those with incomes between $30,000 and $40,000 would receive a 20 percent tax cut; and those earning less than $30,000 would receive a 17 percent tax cut, according to Cheney.
Free market economists say Democrats are missing the point of the president's plan.
"Everyone's getting a tax cut who pays taxes," said Heritage Foundation economist, Dan Mitchell.
But "the purpose of tax cuts ... isn't to put money in people's pockets; it's to get the economy to grow faster by trying to remove some of the disincentives in the current system," said Mitchell.
"There's a big, giant ideological gulf, where the Democrats think the government grows the economy and Republicans think the private sector grows the economy," said Mitchell.
Mitchell also disputes the Democrats' definition of tax equity as precluding tax breaks for wealthy taxpayers.
"Tax equity is treating all tax payers fairly, treating them the same, having the rules apply equally to everyone," said Mitchell. "That's the flat tax; [and] eliminating the double taxation of dividends is an important step toward the flat tax."
The Bush plan is not just cutting taxes, Mitchell added. "It's not just economic growth. It's tax reform."
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