Wizblog

Tax Cut Realities

Two good stories on the economy at NRO today. First, Stephen Moore demolishes the Democrats' contention that the Bush tax cuts benefitted the rich at the expense of the middle and lower classes:

A recent report from the Treasury Department confirms that the rich are paying a bigger share of taxes than they would if the Bush tax cuts hadn’t passed. The Treasury estimates that the top 1 percent of earners will pay about 32.3 percent of taxes this year, which is the same as the CBO estimate. The Treasury also estimates, however, that absent the tax cuts, the top 1 percent would be paying only 30.5 percent of taxes, down 10 percent from 2001.

The Treasury data confirm that the real impact of the tax cuts on the rich has been precisely the opposite of what the CBO study suggests. By resuscitating the economy and spurring a turnaround in income growth, the tax cuts have increased the share paid by the rich. Real income growth has increased significantly since the 2003 tax cuts were passed, increasing at faster than a 6 percent rate in the first two quarters of 2004. With the economy now growing more quickly, we can expect the tax shares paid by high-income groups to increase.

Then Donald Luskin demonstrates that the losses in average income experienced by Americans from 2000 to 2002, which is cited by Democrats as evidence of a "middle class squeeze", is actually accounted for entirely by income losses for Americans earning more than $1 million per year. The lowest income category shrank during that period, and the middle classes grew significantly...

It’s plain as day: The richer you were, the worse you got hit. So why wasn’t the headline “The Rich Get Poorer, and The Poor Get Richer”? Because the Times and the rest of the liberal establishment will never admit that such a thing occurred during George W. Bush’s presidency.