Wow, that looks pretty bad. The richest quintile got the biggest slice of the tax reduction, and the poorest quintile got the smallest. Wimberley (implicitly) invites us to draw the obvious conclusion: the rich got a great deal and poor got screwed.
But hold on a minute. On the Tax Policy Center’s website, you can also find data on the percentage of taxes paid by the quintiles back in 2000, before the Bush tax cuts. Here’s a graph:
Now things look a bit different. The richest quintile paid 66.7% of the taxes, but got only 64.7% of the rebate. The poorest quintile paid only 1.1% of the taxes, but they got 1.3% of the rebate. More generally: The top two quintiles both got a smaller slice of the rebate than the slice of taxes they paid. The bottom three quintiles all got a larger slice of the tax rebate than the slice of taxes they paid in 2000. Seems to me that the tax code became more progressive.
Here’s a simple example to make my point clear, if it’s not already. Suppose I earn $100,000, you earn $20,000, and each of us faces a tax rate of 20%. Then I pay $20,000 and you pay $4000 in taxes. Now, suppose the tax rate is reduced to 19% for both of us. Then I’ll get a tax rebate of $1000, and you’ll get a tax rebate of $200. Good god, look at that: I got a whopping 83% of the tax rebate, and you got only 17% of the tax rebate! What a gyp! The government must love the rich and hate the poor! But wait a second. I also paid 83% of the taxes to begin with, and you paid 17%. We both got the same percentage back as the percentage we paid in.
The point: if the rich pay a bigger share of the taxes to begin with, then the rich will get a bigger share of tax reductions, too (unless the reductions are aimed specifically at the poor).
There are plenty of reasons to dislike the Bush administration’s fiscal policies, but this isn’t one of them.