This is the kind of thing that someone always posts to pen-l. I guess people are bored by this topic.
www.nytimes.com More Get Rich and Pay Less in Taxes By DAVID CAY JOHNSTON The number of Americans with million-dollar incomes more than doubled from 1995 through 1999, as their salaries and their profits from stocks soared, government figures to be published today show. The percentage of their income that went to federal income taxes, however, fell by 11 percent. The incomes of Americans who made less grew as well, though by far less, and the share of their income that went to taxes rose slightly, according to Internal Revenue Service income tax data for the five years through 1999, the latest year available. The wealthiest Americans paid a smaller share of their income in taxes because in 1997 Congress reduced taxes on capital gains, which account for a significant share of their income. Congress also cut taxes for the middle class, but only one in five taxpayers qualified for those cuts, which involved new tax credits for children and education expenses. So, as a group, the portion of their income going to taxes rose. For those with million-dollar incomes, the share of their income that went to taxes fell to 27.9 percent in 1999, from 31.4 percent in 1995. For those Americans who did not make a million dollars, the portion of their income going to taxes edged up in those years, to 12.8 percent from 12.5 percent. About 205,000 taxpayers made $1 million or more in 1999, up from less than 87,000 in 1995. The average income of those who made $1 million or more rose by $568,000 to $3.2 million. Critics of the latest Bush administration economic stimulus and tax cut plan, announced this week, regarded the latest figures as evidence that the wealthy have received too many breaks. "Congress cut taxes on rich people in 1997," Robert McIntyre, director of Citizens for Tax Justice, a nonprofit Washington organization with labor union backing, said. "The rate that they pay fell by quite a bit, while they didn't do much for everyone else and their taxes went up a little. The law did what Congress intended. Their intent was to make sure the wealthier people paid less in taxes and they weren't worried about the rest of the people." President Bush, who won a major tax cut from Congress last year, and his supporters argue that permanent cuts in tax rates encourage investment, which results in more jobs and economic growth. "We need to pass a bill that will help workers and help stimulate the economy," Mr. Bush told reporters on Tuesday. The president's new tax cut plan appeared to die on Tuesday when Senator Tom Daschle, Democrat of South Dakota and the majority leader, moved to shelve it. Those making a million dollars or more, just one of every 625 taxpayers in 1999, more than doubled their slice of the nation's income to 11.2 percent that year, from 5.4 percent in 1995. These high-income taxpayers also captured a quarter of the nation's total personal income growth from 1995 through 1999. The incomes of taxpayers making less than $1 million also rose, though not as sharply. The income of everyone making less than a million dollars averaged $41,000 in 1999, up from $33,500 in 1995, a 22 percent increase, the data, using adjusted gross incomes, showed. The tax return data show that the number of taxpayers reporting incomes of less than $25,000 declined slightly, while those reporting incomes at higher levels increased. William Beech, an economist at the Heritage Foundation in Washington, which supports lower tax rates to foster economic growth, said that these figures may be misleading in several ways. The data fail to capture the growing number of the working poor, and their meager incomes, because many of them are immigrants who work off the books, he said. "The reported income that the I.R.S. picks up from tax returns reflects people who are making their way up the economic ladder," Mr. Beech said. "If we had fully accurate reporting of income, we would see that within the poorest fifth, the median income would be falling because of the millions of people coming into the United States, who mostly earn low incomes." He also noted that among those who file income tax returns, many of who appear poor may actually be retirees with substantial investments. But they need only modest incomes because their mortgages are paid off and their children are grown. The stock market played a large role in creating more million-dollar annual incomes, the figures show. Capital gains over all more than tripled during the five years, with almost three quarters of the increase going to those with million-dollar incomes. The capital gains tax cut of 1997 appeared to favor the 400 richest taxpayers most of all. Harvesting 7 percent of all capital gains in 1998, these very rich Americans paid just 22 percent of their incomes in taxes that year, down from 30 percent in 1994. Although more than half of all families are investors in the stock market, largely through 401(k)'s and similar retirement plans, wealth in America is more highly concentrated today than at any time since 1929, said Professor Edward N. Wolff, a New York University economist. Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~jdevine
