Who Gets the Cookies?: Dividend and Capital Gains Tax Cuts

The New York Times does some digging into IRS data to determine who benefited from President Bush's tax cuts on income from dividends and capital gains:

Big Gain for Rich Seen in Tax Cuts for Investments, by David Cay Johnston, NY Times: The first data to document the effect of President Bush's tax cuts for investment income show that they have significantly lowered the tax burden on the richest Americans, reducing taxes on incomes of more than $10 million by an average of about $500,000.

An analysis of Internal Revenue Service data by The New York Times found that the benefit of the lower taxes on investments was far more concentrated on the very wealthiest Americans than the benefits of Mr. Bush's two previous tax cuts: on wages and other noninvestment income. ...

As Congress debates whether to make the Bush tax cuts permanent, The Times analyzed I.R.S. figures for 2003, the latest year available and the first that reflected the tax cuts for income from dividends and from ... capital gains. The analysis found the following:

Among taxpayers with incomes greater than $10 million, the amount by which their investment tax bill was reduced averaged about $500,000 in 2003, and total tax savings, which included the two Bush tax cuts on compensation, nearly doubled, to slightly more than $1 million.

These taxpayers, whose average income was $26 million, paid about the same share of their income in income taxes as those making $200,000 to $500,000 because of the lowered rates on investment income.

Americans with annual incomes of $1 million or more, about one-tenth of 1 percent all taxpayers, reaped 43 percent of all the savings on investment taxes in 2003. ... The savings from the investment tax cuts are expected to be larger in subsequent years because of gains in the stock market. ... [Interactive Graphic: Dividends in Your County]