With the 1040 deadline just around the corner, here's a timely story on the results of the Bush tax cuts which you may find interesting.  As usual, reality differs somewhat from what was promised. 

There have been three major Bush tax cuts for individuals. Bush twice reduced the top income tax rate, which is now 35 percent -- down from 39.6 percent.

Even more dramatically, Bush in 2003 reduced the top rate for most investment income to 15 percent -- down from 39.6 percent for dividends and 20 percent for profits on asset sales.

The result of that change?

David Johnston writes in the New York Times: "The first data to document the effect of President Bush's tax cuts for investment income show that they have significantly lowered the tax burden on the richest Americans, reducing taxes on incomes of more than $10 million by an average of about $500,000."

Wow. That's a lot of money. How's that compare with your tax savings this year?

"When Congress cut investment taxes three years ago, it was clear that the highest-income Americans would gain the most, because they had the most money in investments. But the size of the cuts and what share goes to each income group have not been known."

"As Congress debates whether to make the Bush tax cuts permanent, The Times analyzed I.R.S. figures for 2003, the latest year available and the first that reflected the tax cuts for income from dividends and from the sale of stock and other assets, known as capital gains."

Another way to look at things: "Americans with annual incomes of $1 million or more, about one-tenth of 1 percent all taxpayers, reaped 43 percent of all the savings on investment taxes in 2003. The savings for these taxpayers averaged about $41,400 each."

A major part of Bush's pitch for the investment tax cut, as outlined in his January 2003 speech, was that it would help cash-strapped retirees.

"Double taxation falls especially hard on retired people. About half of all dividend income goes to America's seniors, and they often rely on those checks for a steady source of income in their retirement."

That's a heartwarming portrait, isn't it? All those seniors relying on Bush's dividend tax cut to help pay the rent and keep their pantries stocked with something better than Alpo.

Well, Johnston concludes that "few taxpayers with modest incomes benefited because most of them who own stocks held them in retirement accounts, which are not eligible for the investment income tax cuts."
Bush also argued at the time: "The benefits of this tax relief will be felt throughout the economy. Abolishing double taxation of dividends will leave nearly 35 million Americans with more of their own money to spend and invest, which will promote savings and return as much as $20 billion this year to the private economy.

"By ending this investment penalty we will strengthen investor confidence. See, by ending double taxation of dividends, we will increase the return on investing, which will draw more money into the markets to provide capital to build factories, to buy equipment, hire more people."

Calculating the indirect results of the tax cut is, of course, more complicated than figuring out the direct results.

But Johnston writes that "the Congressional Research Service, an arm of Congress that analyzes issues, concluded in a January report that lower taxes on investment income may translate into lower savings because people need fewer investments to earn the same after-tax income. In another report, the research service showed how lower taxes on investment income can encourage investment outside the United States, creating jobs, but not for Americans."

Now, where are those NeoCons? Where are those arguments about the tax cuts helping the common people, retirees? Where are those arguments about economic stimulation?

Most of all, what's happened to your per capita share of the national debt since January 2003?

http://www.nytimes.com/2006/04/05/business/05tax.html?...