May 7, 2003
MILLIONAIRES AND THE WAYS
AND MEANS TAX PLAN
by
Isaac Shapiro
PDF of full report |
If you cannot access the files through the links, right-click on the underlined text, click "Save Link As," download to your directory, and open the document in Adobe Acrobat Reader. |
Taxpayers with incomes of more than one million dollars —referred to here as “millionaires” — would reap huge and disproportionate gains from the tax plan that was adopted May 6 by the Ways and Means Committee of the House of Representatives. As a result of the bill’s personal income tax cut provisions (and not counting the benefits these individuals might receive from the bill’s substantial tax cuts for businesses):
Who Gets
the Ways and Means
|
|||
|
Number of Households, 2003 |
Proportion of U.S. Households, 2003 |
2003-2013 |
Households with Income Over $1 Million |
184,000 |
Top 0.1% |
$139 billion |
Households with Income Below About $95,000* |
124,000,000 |
Bottom 89% |
$139 billion |
*Income cut-off is slightly below $95,000 |
How these estimates were made and why the amount to millionaires may be somewhat understated
The
This analysis calculates the
benefits of the Ways and Means bill to millionaires by applying the
distribution of the tax cuts estimated by the Tax Policy Center and the
cost of the tax cuts as estimated by Congress’ Joint Committee on
Taxation. Since the
The following example illustrates how the
estimates used in this analysis were calculated. The
Provision |
Total cost, 2003-2013 |
% of provisions’ cuts to millionaires |
Dollar cuts to millionaires |
% of cuts to bottom 89% |
Dollar cuts to bottom 89% |
Dividend/capital gains |
$277 billion |
39% |
$107 billion |
17% |
$47 billion |
Other personal income tax provisions |
$234 billion |
14% |
$32 billion |
39% |
$92 billion |
TOTAL |
$511 billion |
27% |
$139 billion |
27% |
$139 billion |
The approach used here likely understates the
tax cut benefits that millionaires would receive. Most notably, only the
individual income tax cuts were distributed by the
End Notes:
[1]
The actual number of households having more than one million dollars
will not remain constant from 2003-2013. Also, some households will be
millionaires one year but not the next. This analysis assumes the
proportion of all households that are millionaires remains the same in
the 2004-2013 period as the
[2] The phrase “in essence” is used because the actual calculation included one minor adjustment. In 2003, the distribution of the capital gains/dividend tax cut would be slightly less tilted to millionaires than when the proposal would be fully in effect because the capital gains tax cut would only be in place for two-thirds of the calendar year. The analysis accounted for this small difference for the first year of the proposal. With or without this adjustment, the total tax cuts going to millionaires rounds to $107 billion through 2013.
[3]
The approach used here also likely understates benefits to millionaires
for a more technical reason. The Joint Committee on
[4]
See the Center on