WASHINGTON, Jan. 7 – Families earning more than $1 million a year saw their federal tax rates drop more sharply than any group in the country as a result of President Bush’s tax cuts, according to a new Congressional study.
The study, by the nonpartisan Congressional Budget Office, also shows that tax rates for middle-income earners edged up in 2004, the most recent year for which data was available, while rates for people at the very top continued to decline.
Based on an exhaustive analysis of tax records and census data, the study reinforced the sense that while Mr. Bush’s tax cuts reduced rates for people at every income level, they offered the biggest benefits by far to people at the very top – especially the top 1 percent of income earners.
If there wasn’t a conservative option available, then the default policy would be to sharply raise tax rates on the wealthy. Now it looks as if that day has arrived.
(editors note, there is no conservative option available)
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Finally, Republicans are suffering from an undeniable fact: The rich have gotten a lot richer in recent years. According to University of California, Berkeley, economist Emmanuel Saez, between 1993 and 2006 the average real income of those in the top 1% of the income distribution rose 5.7% per year while that of the bottom 99% rose just 1.1% per year.
This widening of income inequality has generated significant support for soak-the-rich tax policies according to a number of recent polls:
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Yet some Congressional Democrats are fearful of Republicans’ attacks that “soak the rich” tax increases will douse small-business owners, too, even if the number of those affected is far less than Republicans suggest.