2
Americans couldn’t abide rising inequality, we’d now be demonstrating in the streets.” Instead,
quite to the contrary, the past three years have seen a massive additional government-engineered
transfer of wealth from the lower and middle classes to the rich in the form of substantial
reductions in federal income taxes. Congress passed, and President Bush signed, two of the
largest tax cuts in history in 2001 and 2003. One accounting put the total cost to the federal
Treasury of those cuts from 2001 through 2013 at $4.6 trillion—more than twice the federal
government’s total annual budget.
2
Many of the specific provisions of the Bush tax cuts
disproportionately benefited wealthy taxpayers, including cuts in the top rate, reductions in taxes
on dividends and capital gains, and a gradual elimination of the estate tax. As a result, according
to projections by the Institute on Taxation and Economic Policy, the total federal tax burden in
2010 will decline by 25% for the richest one percent of taxpayers and by 21% for the next richest
four percent, but by only 10% for taxpayers in the bottom 95 percent of the income distribution.
3
What is most remarkable is that this massive upward transfer of wealth has been broadly
supported by ordinary Americans, despite a good deal of public suspicion that the benefits would
go mostly to the rich. For example, a CBS News Poll in April 2001, shortly before the first big
tax cut was passed, found that 51% of the public favored President Bush’s tax cut plan, while
2
The $4.6 trillion figure includes additional interest payments stemming from the resulting increase in
the federal budget deficit; in addition, it assumes that a variety of nominally temporary rate reductions
and credits will subsequently be made permanent. See John Springer, “Administration Tax Cut
Proposals Would Cost $2.7 Trillion Through 2013,” Center on Budget and Policy Priorities, March 10,
2003: www.cbpp.org.
3
This calculation is based on the assumption that major provisions scheduled to expire by 2010 will, in
fact, be extended. Absent that assumption the total tax cut for the richest one percent is reduced by about
one-third and the total tax cut for the bottom 95 percent is reduced by about one-half. See “Effects of
First Three Bush Tax Cuts Charted,” Citizens for Tax Justice, June 4, 2003: www.ctj.org.
Convention