An analysis of the Internal Revenue Service's 2003 figures show that President Bush's tax cuts on investment income have had a major effect on citizens in the upper tax brackets.
A study by The New York Times found that taxes on incomes of more than $10 million were reduced by an average of about $500,000. The 2003 tax year was the first that the president's tax cut on investment income were in effect, reflecting cuts for income from dividends and capital gains. The investment cuts' benefits were much more concentrated on the very wealthiest Americans than the benefits of President Bush's earliest tax cuts on wages and other noninvestment income, the paper said.
Congress is now debating whether to make the Bush tax cuts permanent, alongside whether to extend a reprieve from the alternative minimum tax.
The analysis also found:
- Total tax savings for taxpayers with incomes greater than $10 million nearly doubled, to slightly more than $1 million;
- Those taxpayers, whose average income was $26 million, paid about the same share of their income in income taxes as those making $200,000 to $500,000, because of the lowered rates on investment income;
- Taxpayers with annual incomes of $1 million or more, about one-tenth of 1 percent of all taxpayers, reaped 43 percent of all the savings on investment taxes in 2003, an average of just over $40,000 each; and,
- The savings from the investment tax cuts are expected to be larger in future years because of gains in the stock market.
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