Tax Cut

Host intro: Tax cut plans are often called by critics a giveaway to the rich, but "rich," according to Pete du Pont of the National Center for Policy Analysis, is in the eye of the beholder. For example, you and the IRS see very different things.

The rich pay lots of taxes. The top one percent, people with adjusted gross incomes of over $196,000, paid 29 percent of all income taxes in 1994.

The top five percent — incomes of over $91,000 — pay almost half the entire federal income tax burden.

The bottom fifty percent of taxpayers, with incomes below $22,000, pay less than five percent of all income taxes.

Ok, so who's rich? The top 25 percent of taxpayers? That would be anyone with an income over $43,000. So a person making $22,000 is poor. But a married couple, each of whom make $22,000, are rich, because they're in the top 25 percent. Thus, a person making $22,000 a year is poor, but a couple each making $22,000 is rich. Why's this important? Because according to the Internal Revenue Service's own data, the richer you are the more you pay.

The top one percent of taxpayers pay 28 percent of their Incomes on average in income taxes. The top 5 percent pay 23 percent. The top 10 percent pay a little over 20 percent while the top 25 percent pay 17 percent.

The bottom 50 percent of taxpayers pay an effective rate of just 4 percent.

So when you hear critics whine that tax cuts are a giveaway to the rich, remember two things.

The "real" rich — people earning $200,000 a year or more — already pay more taxes than anyone.

But the "IRS rich" — a lot of middle and working class couples — get slugged with unconscionably high progressive tax rates too.

Well, those are my ideas, and at the NCPA, we know ideas can change the world. I'm Pete du Pont, and I'll see you tomorrow.