A recently-released report by the Congressional Research Service (CRS), on the changes in the distribution of income among individual filers of tax returns between 1996 and 2006, has concluded that the tax cuts that were first enacted under the presidency of George W. Bush have contributed to a widening of the United States wealth gap.
The CRS report examines changes in income inequality among US tax filers between 1996 and 2006. In particular, it points out that Congress will soon need to address issues affecting the distribution of taxpayers’ income in the US.
For example, the Administration has stated that one of its principles for tax reform is to observe the “Buffett rule” that “no household making over USD1m annually should pay a smaller share of its income in taxes than middle-class families pay,” while Congress will need, later this year, to debate the scheduled expiration (at the end of 2012) of the 2001 and 2003 Bush tax cuts.
The CRS found that inflation-adjusted average after-tax income grew by 25% between 1996 and 2006 (the last year for which individual income tax data is publicly available). However, the average increase obscures a great deal of variation; in that “the poorest 20% of tax filers experienced a 6% reduction in income, while the top 0.1% of tax filers saw their income almost double.”