March 16, 2006 05:29 PM | Permalink |
In 2003, Congress enacted—and President Bush signed into law—a new tax break that lowered the top federal income tax rate on capital gains from 20 percent to 15 percent. This special lower capital gains rate, which is less than half of the 35 percent top tax rate on salaries and wages, is not scheduled to expire until the beginning of 2009—but tax writers in Congress are already pushing to extend this tax break. This analysis provides a quick reminder that the lion’s share of the benefits from this tax break go to a very small group of the wealthiest Americans:
- In 2005, the wealthiest 1 percent of Americans received almost 70 percent of all long-term capital gains—and paid 72 percent of the tax on these capital gains.
- The wealthiest 10 percent of taxpayers enjoyed 90 percent of the capital gains eligible for this special tax break.
- The poorest sixty percent of Americans, by contrast, collectively received just 2 percent of the capital gains eligible for the lower capital gains rates.