As the House prepares to vote this week on extending President Bush’s tax cuts, the debate about whether to continue those cuts for the wealthiest taxpayers goes on.
Tax Policy Center figures show just how much the Bush tax cuts have benefited people at the top. As we explain in our new analysis, the average tax cut that people making over $1 million received topped $110,000 in each of the last nine years — totalling more than $1 million over this period.
The numbers also make clear that the Bush tax cuts are regressive. For example, in 2010, the year in which all of the Bush estate and income tax cuts were fully phased in, the tax cuts:
Raised the average after-tax income of the top 1 percent of households by 6.7 percent (or $66,618);
Raised the average after-tax income of the top 20 percent of households by 4.6 percent (or $7,860);
Raised the average after-tax income of the middle 20 percent of households by 2.8 percent (or $1,039), and
Raised the average after-tax income of the bottom 20 percent of households by just 1.0 percent (or $99).
The tax cuts were similarly regressive even in the years before they were fully phased in.
Policymakers should consider the current debate in this context. If the tax cuts on incomes above $250,000 ($200,000 for single filers) expire, the wealthiest taxpayers will still have enjoyed a decade-long windfall — and the top two tax rates will simply return to those of the 1990s, when the economy boomed, corporations and small businesses thrived, and tax rates on high-income taxpayers still were lower than in most prior decades.