Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, July 24, 1990 TAG: 9007240397
SECTION: NATIONAL/INTERNATIONAL PAGE: A/2 EDITION: EVENING
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
The changes were spurred in part by the tax law changes of the Reagan years, according to a report by the Center on Budget and Policy Priorities, a non-profit research group specializing in policy issues affecting the poor.
The report released Monday was based on an analysis of recently released Congressional Budget Office tax and income statistics.
As a result of shifts in tax burdens and capital gains income, the center said, the richest 1 percent receive nearly as much of Americans' total income after taxes as the bottom 40 percent.
The bottom 40 percent will receive 14.2 percent of total after-tax income received by all groups in 1990, while the top 1 percent will receive 12.6 percent.
"This marks a sharp change from 1980, when the top 1 percent received half as much after-tax income as the bottom 40 percent," it said.
The center also said Census Bureau statistics show that the share of family income going to the middle 20 percent of Americans reached a low of 16.7 percent in 1988, the last year for which figures were available. The figure was 17 percent in 1947, reached a high of 18.1 percent in 1957 and remained between 17 and 18 percent through 1984.
Robert Greenstein, executive director of the center, said the changes were due in part to increased income from capital gains received by the wealthy.
The findings, he said, were an argument against President Bush's call for a cut in the tax on capital gains.
"Since the vast bulk of capital gains income goes to the very wealthy, they would receive most of the benefits from a reduction in taxes on capital gains," Greenstein said.
Bush and other advocates of cutting the capital gains tax say it would provide an added incentive for people to invest capital in job-creating new and expanded businesses.
The report said the most affluent Americans received large income gains during the 1980s, while middle-income people gained little and the poor fell behind.
The top 1 percent of the population will receive an expected average of more than $175,000 in capital gains income in 1990, up $92,000 from what they received in 1980 after adjusting for inflation.
By contrast, those in the bottom 90 percent are projected to receive an average capital gains income of $299 in 1990, up just $12 over the period, it said.
As a result of tax law changes, the report said, wealthy households pay a smaller percentage of their income in taxes in 1990 than they did in 1980, and lower income households pay a larger proportion.
by CNB