Tax Cut Compendium

Author: Tom Paine Staff

Published: September 23, 2003

When we talk about the Bush tax cuts, we're talking about three bills, enacted in 2001, 2002 and 2003. The estimates for the total cost of these tax cuts range from $1.3 trillion (2003-2013) to $1.9 trillion (2001-2009). The estimates differ because they come from different analysts and may or may not include interest. These estimates come from the Center for Budget and Policy Priorities, the Tax Policy Center, and Citizens for Tax Justice.

Capital Gains And Dividends

Before the Bush cuts, dividends were taxed as ordinary income and capital gains had a 20 percent cap. Now both dividends and capital gains are taxed at a maximum of 15 percent, as a result of the 2003 legislation.

The following two charts are from the Tax Policy Center, a project of the Brookings Institution and the Urban Institute. They show who benefits from cutting taxes on dividends and capital gains. This first chart shows 54 percent of the benefit goes to the top 1 percent of income earners.

This second chart shows the tax savings in dollars for varying income classes. It shows that most of the savings from cutting the tax on capital gains and dividends goes to the taxpayers with incomes above $200,000.

The estimate that repealing the tax cut on dividends and capital gains would save $148 billion over 10 years comes from Congress' Joint Committee on Taxation. Look at the bottom right of the first page of this chart for the $148 billion figure.

Tax Rates On The Wealthiest Americans

The income tax rate paid by the wealthiest Americans was lowered from 39.6 percent before Bush, to 35 percent with his 2001 tax cut. The same legislation lowered the estate tax, which also benefited primarily wealthy people.

Various tax policy experts, such as Joel Friedman of the Center for Budget and Policy Priorities say lowering the maximum tax rate to 35 percent reduces the federal government's revenues by $18 billion to $20 billion annually. This chart, from Congress' Joint Committee on Taxation, shows lowering the top four tax rates for the wealthiest Americans over several years starting in 2001 reduces federal revenues by even more significant amounts.