Were the Bush Tax Cuts for the Rich?

Jamario Bell

MG 350

Research Paper

Were the Bush Tax Cuts for the Rich?

Before I begin explaining why it is unethical for politicians to say that the Bush tax cuts unfairly benefited the rich I would like to briefly explain what the Bush tax cuts actually are. In 2001, due to the devastating financial impact of both the recession and the terrorist attacks of 9/11, President George W. Bush proposed and signed the Economic Growth and Tax Relief Reconciliation Act. According to the official White House archives, this bill did the following: Reduced tax rates for every American who pays income taxes, created a new 10 percent tax bracket, doubled the child tax credit to $1,000 by 2010, reduced the marriage penalty beginning in 2005, put the federal estate tax (death tax) on the road to non-existence, increased education tax benefits, and increased limits on IRA and 401(k) contributions and changed limits on defined benefit pension plans. The Jobs and Growth Tax Reconciliation Act of 2003 aided in accelerating a lot of what was outlined in the Growth and Tax Relief Reconciliation Act. This legislation also increased small business expensing by four times, taking it from $25,000 to $100,000.

According to official Internal Revenue Service data, the top 1% of wage earners dealt out $84 billion more in federal income taxes in 2007 than in 2000 before the Bush tax cuts were passed. The data also shows that the share of total federal income taxes paid by the top 1% of earners increased from 37% in 2000, prior to the Bush tax cuts, to 40% in 2007, after the legislation was proposed and signed. The lower half of wage earners paid out $6 billion less in federal income taxes in 2007 than in 2000, this is 16% decrease. The share of federal income taxes that the bottom 50% had to pay dropped from 3.9% in 2000 to 2.9% in 2007. Below is a chart that I came across while researching this topic that visually represents the 2004 income tax shares under the Bush tax cuts. As you...