The IRS Quarterly Statistics of Income Report has hundreds of pages of new numbers, but one well respected tax publication provides this summary:
The 2001 and 2003 tax cuts shrunk individual income tax revenues in 2003 despite a rise in taxable income and forced over 400,000 new taxpayers onto the rolls of the alternative minimum tax, according to IRS data released on December 21. The IRS’s latest Statistics of Income Bulletin showed total individual taxable income rising 2.5 percent to $4.2 trillion from 2002 to 2003. But despite the extra $90 million in taxable income in 2003, the IRS found that total individual income tax collected actually fell 6.1 percent to $748 billion as a result of the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA). “This was the third successive year that total income tax declined,” the report said. “The decline in total income tax for 2003 reflects the reduction in tax rates under JGTRRA.” Total revenue would have declined even further, the report found, had AMT revenues not conversely jumped 38.2 percent, with 23.4 percent more taxpayers paying the tax. “This is largely attributable to the decrease in ordinary tax rates due to JGTRRA, while the tax rates on alternative minimum taxable income remained the same as 2002,” the report said. “Over 0.4 million more taxpayers were required to pay the AMT for 2003.” … The IRS also found that a 23 percent jump in total capital gains and dividends income was responsible for a large portion of the 2003 increase in taxable income, with wage and salary income rising just 2 percent. Capital gains and dividends income received the largest tax rate cuts under JGTRRA, contributing to the decline in revenues. The IRS report found that all income classes but the lowest saw smaller average tax rates in 2003, but that higher-income groups received a much larger percentage tax cut. “The lower average rates for these higher-income returns not only reflect the decrease in tax rates on ordinary income but also a new preferential tax rate for certain qualified dividends and long-term capital gains sold after May 5, 2003, which were introduced in JGTRRA,” the report stated.
Now to regular readers of the Angrybear – this is old news. But some folks are slow learners.