President Bush may be "pleased" - his word - with our economy, but there is new evidence of just how sadly out of touch he is with the real world of regular Americans living from paycheck to shrinking paycheck. The latest IRS data show average income was less in 2005 than in 2000. It was the fifth consecutive year that Americans had to make do with less money. Since the end of World War II, total income listed on tax returns had grown, with only one exception, each and every year until 2001. Since then, there has been a five-year period of lower average incomes, and four years of lower total incomes. Shrinking incomes are "a new experience for the majority of Americans born since 1945,"according to The New York Times.
The IRS statistics provide fresh evidence of the growing income gap in the United States and the monumentally disproportionate impact of special tax breaks for the wealthy that Bush signed into law in 2003.
"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," the Times reported. "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 $1 million and up received 62 percent of the savings from the reduced tax rates on long-term capital gains and dividends, according to an analysis of the same IRS data by the highly-respected Citizens for Tax Justice. In what the citizens group called the "most amazing" finding, "13,776 tax filers with adjusted gross incomes exceeding $10 million - a mere 0.01 percent of all filers - received more than 28 percent of the total tax savings."
The fact that nearly all of the growth in incomes was among the super rich and that a majority of investment tax breaks went to those making more than $1 million was pooh poohed by White House spokesman Tony Fratto. He reportedly sniffed that it all adds up to a "not a very interesting story." Translation: Shush, don't let the American people know what's happening.
Meanwhile, Bush declares himself "pleased with the economic progress we're making." Which once again raises a question: When it comes to the president's understanding of the American economy, what planet is he living on?
To read the Citizens for Tax Justice report, click here.
To read The New York Times report,click here.