economic policy institute

Tenth Anniversary of the Bush-era Tax Cuts
Andrew Fieldhouse Ethan Pollack 
June 1, 2011

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The Economic Growth and Tax Relief Reconciliation Act of 2001 (the first of a series of Bush-era tax changes) was enacted on June 7, 2001. Since then, the Bush tax cuts have exacerbated the trend of widening income inequality, accompanied the worst economic expansion since World War II, and turned budget surpluses into deficits.

On this 10th anniversary of the first Bush-era tax changes, the following 10 facts should be noted:

1. The Bush tax cuts disproportionately benefited the wealthy.

The Bush-era tax cuts¹ conferred disproportionate benefits on those at the top of the earnings distribution, exacerbating a trend of widening income inequality.

• In 2010, the top 1% of earners (i.e., tax filers making over $645,000) received 38% of the breaks in the 2001-08 tax changes; 55% of the tax breaks went to the top 10% of earners (those making over $170,000).²

• The top 0.1% of earners (i.e., making over $3 million) received an average tax cut of roughly $520,000, more than 450 times larger than the share received by an average middle-income family.³

• A multitude of tax cuts overwhelmingly benefited the wealthiest Americans. These cuts included lower tax rates on capital gains and dividends, elimination of both the personal exemption phase-out and the limitation on itemized deductions, lower marginal rates for the top two tax brackets, and lower estate tax rates and an increase in the estate tax exemption. For instance, individuals in or below the 25% tax bracket (single-filers making less than $83,000 and joint-filers making less than $138,000) received only 16% of the benefit from reducing rates on long-term capital gains and qualifying dividends in 2005.⁴ Similarly, the top 5% of earners received 100% of the benefit from partially repealing the personal exemption phase-out and the limitation on itemized deductions in 2006.⁵

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