June 1, 2001 05:42 PM | | Bookmark and Share

Click here to see this analysis in PDF format.
Click here to see examples of how the rebate works.

Some 39 percent of American taxpayers will not get the full amount of the highly-touted “rebate checks” that will be mailed this summer as a result of the President’s just-passed tax bill. That translates into 51 million taxpayers who will not get the full amount of the promised rebate checks. According to a new analysis by Citizens for Tax Justice:

  • Thirty-four million taxpayers–26 percent– will get no rebate check at all
  • Another 17 million taxpayers–13 percent–will get only partial rebates, averaging about half the advertised amounts of $600 for couples, $500 for single parents and $300 for other taxpayers.
The Check is Not in the Mail: Taxpayers with no rebate or only partial rebate this year from the 2001 tax bill
  All Taxpayers
Income Group (all taxpayers) % with no rebate % with partial rebate Total % less than full Average all taxpayers # with less than full (000)
Lowest 20% 75% 22% 97% $ 42 25,175
Second 20% 37% 22% 59% 179 15,324
Middle 20% 13% 17% 30% 335 7,724
Fourth 20% 2% 4% 6% 482 1,681
Next 15% 1% 1% 551 190
Next 4% 1% 1% 560 52
Top 1% 1% 1% 555 13
ALL 26% 13% 39% $ 315 51,082
Bottom 60% 42% 20% 62% $ 185 48,224
Top 10% 1% 1% 559 130

The taxpayers who get no or reduced benefits from the tax bill are concentrated in the bottom three-fifths of income earners. Sixty-two percent of the three-fifths of all taxpayers who make less than $44,000 a year will get less than the full rebate amounts, with 42 percent of these taxpayers getting nothing at all.

The tax rebates are supposed to reflect the tax savings from the new 10 percent income-tax bracket on the first $12,000 in taxable income for couples, $10,000 for single parents, and $6,000 for others. Payroll taxes, which are the largest federal tax for three out of four taxpayers, are not counted in computing the rebates.

Oddly, although most taxpayers in the bottom 60 percent of the income scale will get reduced or zero rebates, the tax bill extends the benefits of the rebate to about two million upper-income taxpayers who will not actually benefit from the new 10 percent rate bracket, due to the Alternative Minimum Tax.

“Like the rest of the Bush tax plan, the rebates have been carefully designed to give as little as possible to those who need the money, and as much as possible to those who don’t,” said Robert S. McIntyre, director of Citizens for Tax Justice.

On a state-by-state basis, the percentage of taxpayers with no or reduced rebates exceeds 50 percent in Mississippi (52%) and West Virginia (50.5%). Other states among the ten with the highest percentages of taxpayers with no or reduced rebates include: Louisiana (49%), Montana (49%), Arkansas (48%), Oklahoma (48%), Alabama (47%), Kentucky (45%), New Mexico (45%) and North Dakota (44%)

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