[Dialogue] {Disarmed} A must save for your conversations with conservatives

Wed Aug 22 19:13:26 EDT 2007

_http://www.nytimes.com/2007/08/21/business/21tax.html?_r=3&th=&oref=slogin&em
c=th&pagewanted=print&oref=slogin_ 
(http://www.nytimes.com/2007/08/21/business/21tax.html?_r=3&th=&oref=slogin&emc=th&pagewanted=print&oref=slogin) 

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 (http://www.nytimes.com/) 

____________________________________

August 21, 2007

2005 Incomes, on Average, Still Below  2000 Peak 
By _DAVID  CAY JOHNSTON_ 
(http://topics.nytimes.com/top/reference/timestopics/people/j/david_cay_johnston/index.html?inline=nyt-per) 

Correction Appended 
Americans earned a smaller average income in 2005 than in 2000, the fifth  
consecutive year that they had to make ends meet with less money than at the  
peak of the last economic expansion, new government data shows. 
While incomes have been on the rise since 2002, the average income in 2005  
was $55,238, still nearly 1 percent less than the $55,714 in 2000, after  
adjusting for inflation, analysis of new tax statistics show.  
The combined income of all Americans in 2005 was slightly larger than it was  
in 2000, but because more people were dividing up the national income pie, 
the  average remained smaller. Total adjusted gross income in 2005 was $7.43  
trillion, up 3.1 percent from 2000 and 5.8 percent from 2004. 
Total income listed on tax returns grew every year after World War II, with a 
 single one-year exception, until 2001, making the five-year period of lower  
average incomes and four years of lower total incomes a new experience for 
the  majority of Americans born since 1945. 
The White House said the fact that average incomes were smaller five years  
after the Internet bubble burst “should not surprise anyone.”  
The growth in total incomes was concentrated among those making more than $1  
million. The number of such taxpayers grew by more than 26 percent, to 
303,817  in 2005, from 239,685 in 2000.  
These individuals, who constitute less than a quarter of 1 percent of all  
taxpayers, reaped almost 47 percent of the total income gains in 2005, compared  
with 2000.  
People with incomes of more than a million dollars also received 62 percent  
of the savings from the reduced tax rates on long-term capital gains and  
dividends that President Bush signed into law in 2003, according to a separate  
analysis by Citizens for Tax Justice, a group that points out policies that it  
says favor the rich. 
The group’s calculations showed that 28 percent of the investment tax cut  
savings went to just 11,433 of the 134 million taxpayers, those who made $10  
million or more, saving them almost $1.9 million each. Over all, this small  
number of wealthy Americans saved $21.7 billion in taxes on their investment  
income as a result of the tax-cut law.  
The nearly 90 percent of Americans who make less than $100,000 a year saved  
on average $318 each on their investments. They collected 5.3 percent of the  
total savings from reduced tax rates on investment income. 
The I.R.S. data showed that the number of Americans making less than $25,000  
a year shrank, down by 3.2 million, or 5.5 percent.  
Nearly half of Americans reported incomes of less than $30,000, and  
two-thirds make less than $50,000. 
The number of taxpayers making more than $100,000 grew by nearly 3.4 million  
and accounted for more than two-thirds of the growth in the number of returns 
 filed in 2005 compared with those in 2000. 
The fact that average incomes remained lower in 2005 than five years earlier  
helps explain why so many Americans report feeling economic stress despite  
overall growth in the economy. Many Americans are also paying a larger share of 
 their health care costs and have had their retirement benefits reduced, 
adding  to their out-of-pocket costs. 
The White House noted that during the same five years, income tax rates have  
been cut under a series of laws sponsored by President Bush. Mr. Bush has  
delivered a steady stream of upbeat assessments of the economy, saying last  
fall, for example, “I’m pleased with the economic progress we’re making.” 
Tony Fratto, a White House spokesman, attributed the drop in average incomes  
to “the significant wrenching hits that our economy took in 2001 and 2002, so 
no  one should be surprised that what a bubble economy created in the late 
1990s and  2000, where economic data were skewed, would take some time to 
recover.” 
Mr. Fratto said the fact that nearly all of the growth in incomes was among  
those in the upper reaches of the income ladder and that the majority of  
investment tax breaks went to those making more than $1 million “is not a very  
interesting story.” 
“There is no question that you will always have distributional concerns with  
a tax rate, a broad-based tax rate, at the very top of the income scale,” Mr. 
 Fratto said.  
He said the more significant issue was the reduction in taxes for  
middle-class Americans that Mr. Bush won from Congress. 
Robert S. McIntyre, the director of Citizens for Tax Justice, said that even  
though he expected a few very wealthy people to reap most of the tax savings  
generated by lower tax rates on dividends and capital gains, the size of the  
savings “still takes your breath away.” 
He said the tax savings at the top, combined with lower average incomes after 
 five years, “shows that trickle down doesn’t work.” 
Correction: August 22, 2007 
An article in Business Day yesterday about the average income of Americans  
from 2000 to 2005 misstated, in some copies, the nation’s total adjusted gross  
income in 2005. It was $7.43 trillion, not billion. 

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