Tax Cuts and the Rich

All I know is I'd like to be rich. Actually, according to the government, I already am. But it sure doesn't feel like it.

The New York Times headline -- "Tax Cuts Offer Most for Very Rich" -- said it all. That claim was uncritically repeated by CNN, posted on Brad DeLong's blog and so on. But was it true?

The report by Edmund Andrews was about the latest "Historical Effective Tax Rates" from the Congressional Budget Office (CBO).

The CBO shows that from 2000 (the year before President Bush cut tax rates) to 2004, the after-tax income of the very richest 1 percent fell by 7.9 percent. After taking into account the Bush tax cuts, the 8.3 percent drop in after-tax incomes of the top 1 percent was even worse. From 2000 to 2004, average real incomes of the middle three-fifths rose 4.1 percent after-taxes, but only 0.5 percent before taxes. In other words, 88 percent of middle-income gains between 2000 and 2004 were due to those nefarious Bush tax cuts of 2003.

Those who rely on the New York Times (unlike readers of The Washington Times), will never find out what the CBO report reveals unless they go to cbo.gov and read it. To To have any chance of his story appearing in the New York Times, Mr. Andrews had no choice but to dissemble.