In July, the Center on Budget and Policy Priorities (CBPP) released a report that measured the tax benefits from the Bush tax cuts and which Americans were receiving them. Their findings reinforce what most of us have been feeling for some time – the greatest benefit from these cuts went to the wealthiest few, while the rest of Americans received significantly less benefit.In their report the CBPP calculated the average value of the tax cuts per household since 2004 using data from the Tax Policy Center. In a report that will be released later tomorrow, Innovation Ohio used these calculations to look at what percentage of these tax cuts went to which households. As you can see in the chart below, our findings show that households that made over $200,000 a year received 73 percent of all tax benefits from the Bush tax cuts. This left the remaining 27 percent of benefits to be split between 98 percent of all households in America. proposal to reach a deal on the deficit put forth a plan that raises the top rates for the richest two percent but keeps the Bush tax cut in place for the other 98 percent of Americans. The president and Congressional Democrats understand that to protect entitlements like Social Security, Medicare and Medicaid, we have to ask the wealthiest in America to pay a little more. Considering that they have been the main beneficiaries of economic policy over the last nine years, this only seems fair.
- Corporate profits in the U.S. have recently hit an all-time high. This comes just after the worst recession since the Great Depression and in the midst of several years’ worth of sluggish growth for the overall economy. Even with the last three U.S. recessions, corporate profit margins have been in a fantastic uptrend since the early 1980s.
- Wages in the U.S. are at a historic low as a percentage of the overall economy. Wages in the U.S. have been on a downtrend since 1970. Compared to the parabolic rise in corporate profits since the end of the Great Recession, wages have continued to slide.
A common talking point from the Right is that no extension of the Bush tax cuts for the top 2 percent of incomes in the U.S. will hurt small business. Our research is not finding evidence that this is true. First, let’s hear what House Speaker John Boehner, (R-OH), has said recently about the Bush tax cuts and small businesses:
“Raising taxes on small-business people is the wrong prescription given where our economy is.” “Raising taxes on small businesses will kill jobs in America. It is as simple as that.”Actually, it’s not so simple. The Treasury Department released a report in 2011 that tried to better define what a small business is and who exactly are the small business owners in America. The report found that very few small business owners face the top two tax rates. Treasury found that only 2.5 percent of small business owners, and 7.9 percent of filers with any income from small businesses that employ people, face the top two tax rates. Only 0.5 percent of small business owners, and 3.3 percent of filers that receive any income from small businesses that employ people, make $1 million or more per year. Giving a tax break to high income Americans would be giving a very large benefit to people who overwhelmingly do not work at or run small businesses. [Read more…]