SUPER RICH IN AMERICA….Back in 2003, here’s how the Bush administration explained its proposed dividend tax cut:
Everyone who invests in the stock market and receives dividend income?especially seniors?will benefit from elimination of the double taxation on dividends. About half of all dividend income goes to America?s seniors, who often rely on those checks for a steady source of retirement income.
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.
Fast forward to 2006 and you will be unsurprised to learn that an analysis by the New York Times demonstrates that the reality turned out to be a wee bit different:
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 analyses show that more than 70 percent of the tax savings on investment income went to the top 2 percent, about 2.6 million taxpayers.
By contrast, 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. Money in these accounts is not taxed until withdrawal, when the higher rates on wages apply.
Sure, half of all dividend income goes to America’s seniors ? America’s super-wealthy seniors, that is. By contrast, the kind of middle class senior that puts money into a retirement account doesn’t benefit at all from dividend and capital gains tax cuts.
It’s a good time to be super rich in America. A very good time.