Monday, October 02, 2006

Income Tax Cuts Benefit All

An article from today's USA Today:

Americans of every income have benefited from a drop in federal income tax rates as Bush administration tax cuts enacted since 2000 took effect, an independent analysis of newly released IRS data shows.

For example, millions of lower-income Americans — those earning $25,000 annually or less — have been taken off the federal tax rolls. In 2000, 29 million tax returns had no federal tax owed. Four years later, the number rose to 43 million returns.

A taxpayer who earned $35,000 in 2000 would have paid 8.5% of that income -- $2,989 after credits -- in federal taxes; in 2004, federal taxes would have accounted for only 5% of that taxpayer's annual income, or $1,792 (a 40% decrease in tax burden).

But those earning $75,000 to $500,000 are shouldering a larger share of total taxes paid as millions more of them earn higher incomes and get hit with the Alternative Minimum Tax, the analysis also found.

At the higher end of the income brackets, a $1.75 million earner would have paid $513,625 in 2000 federal taxes, when the rate for that earning bracket was 29.35 percent; four years later, when the rate dropped to 25 percent, that earner would have paid $437,500 (a 14.8% cut in tax burden).

Further, the overall tax buden of higher income taxpayers increased. Taxpayers who earned between $100,000 and $200,000 in 2004 paid 22.5% of all federal taxes, up from 19.4% four years earlier. Those who earned between $200,000 and $500,000 in 2004 paid 18% percent of all federal taxes, up from 15.4% in 2000, the analysis showed.


Post a Comment

<< Home