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1 Gerald Prante, Comparing Popular Tax Deductions to the Bush Tax Cuts 1 (2007)

handle is hein.taxfoundation/ffihxz0001 and id is 1 raw text is: FOUNDATION June 21, 2007 Comparing Popular Tax Deductions to the Bush Tax Cuts Hallowed Deductions Give Little to the Middle, Bush Tax Cuts Help More by Gerald Prante Fiscal Fact No. 87 The debate over what to do with the Alternative Minimum Tax has led to some silly public statements about who benefits from special provisions of the income tax code. Lawmakers find it easy to demand repeal or reduction of the AMT, but in announcing support for tax hikes or spending cuts to make up the uncollected revenue, as now required, their rhetoric has been deceptive, to say the least.1 So far the favorite revenue target is to repeal the Bush tax cuts, which so many have accused of benefiting only the rich, or to enact something similar. The idea of repealing the deduction for state-local taxes is also getting some attention. Comparing those two ideas in Table 1, we see that the tax savings would flow to almost exactly the same people. There are many ways of quantifying tax policy changes, and throughout the debate over the Bush tax cuts, opponents preferred shares. This presentation answers the question: What share of the tax savings went to the top 20, 10, or 1 percent of taxpayers? Because the Bush tax cuts were mainly across-the-board cuts in tax rates, high-income taxpayers who paid the most to begin with received the largest shares of tax savings. This presentation dovetailed nicely with class warfare rhetoric that Bush favored high-income people. People who favored the Bush tax cuts preferred to present the change in tax rates for each income group. This presentation answers the question: For each income group, what percentage of current tax payments will be saved under the Bush tax cuts? Because annual tax savings between $1,000 and $5,000 are large for low- and middle-income taxpayers, this presentation showed the tax cuts' broad appeal. In this piece, we use the first method, presenting the tax savings of various tax laws as shares, but we apply it not only to the Bush tax cuts but to popular tax preferences that are vociferously defended by many of the same politicians who denounce the Bush tax cuts.

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