More on the Distribution of Benefits
Just for comparison, the following chart shows the average benefit for the bottom 80%, the median benefit for the bottom 80%, and the benefit for the top 1%, under Bush’s plan and under Grassley’s plan. As you can see, Grassley’s plan isn’t progressive, per se, but compared to Bush’s proposal, it’s a plan Eugene Debs could endorse. (click here for a larger, more legible, graph).
Note how I had to add the labels indicating the savings for the median tax payer in the bottom 80%–without the labels, you can’t even see it.
UPDATE: I should clarify that the $2.50 median figure is a best guess that is much more likely to be zero. All other numbers are real–derived from the Waxman report, the CNN report on Grassley, and some algebra. How did I get $2.50? For the first time ever, in 2001 the number of stock holders exceeded the number of non-stock holders. So a bit more than half of the U.S. population now owns stocks, meaning that 40-something percent do not own stocks and therefore do not receive dividend income at all and thus have a (direct) benefit of zero from a dividend tax cut. The median of the 0% to 80% range is the 40th percentile of the overall income distribution. If stock ownership increased one-to-one with income, then the median benefit would be zero. But then I figured that some (but a distinct minority) of the 40th percentile (income of $33,314) might hold a few shares of the biggies, ATT, Coke, GE, and the like, so I guessed that dividend income would average out to about $2.50 (averaging a bunch of zeroes, and a few numbers in the hundreds of dollars and then multiplying by the 20% tax rate for that bracket).