Will You Benefit From the Tax Cuts?
May 22 -- The $350 billion tax-cut package heading through Congress may be "good for American workers" and "good for American families," as President Bush says, but a closer look at the cut shows for most taxpayers, all it's good for is $100 or less.
The big winners of the tax package, which will be the third-largest tax cut in history, are rich people and families with children.
People like Connie and John Moran are eager for the tax cut to kick in. They are both teachers with a joint income of between $50,000 and $70,000 and they have four children under the age of 17.
Because they are married, the couple will get a tax cut of $233. They will also get a tax credit of $400 for each child and a $100 tax cut on their income.
"I'm pleased with the amount," said Connie.
"We weren't really counting on it," said John of the tax break. "It's nice."
But married couples with minor children like the Morans make up only one-fifth of taxpayers, say experts. Some lament that other taxpayers will be left out.
"You are talking about single people, you are talking about single moms with children, you are talking about some elderly people who don't have dividends and capital-gains income," said Peter Orszag, a research fellow in economics at the Brookings Institution, a Washington-based think tank.
The Rich Get Richer
The other tax-cut winners, the wealthy, also make up a very small group. The top 5 percent of taxpayers would get more than half of the benefits from the tax cut.
People who make between $100,000 and $200,000 would get a tax cut of more than $2,500 on their income alone. Those who make between $500,000 and $1 million would get an average income tax cut of $17,324.
"The people I would say do the best are the people at the upper levels," said Mark Garay, deputy director of tax policy for Deloitte & Touche in Washington.
Because wealthy taxpayers are heavily invested, they also stand to gain from a reduction in taxes on dividends paid to stockholders and a reduction in taxes paid on capital gains when their investments are sold.
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