..."If class warfare is being waged in America, my class is clearly winning," Buffett said in Berkshire Hathaway Inc.'s annual report.
Except for 1983, the percentage of federal tax receipts from corporate income taxes last year was the lowest since data was first published in 1934, Buffett said.
"Tax breaks for corporations (and their investors, particularly large ones) were a major part of the administration's 2002 and 2003 initiatives," Buffett said....
to Report Finds Tax Cuts Heavily Favor the Wealthy:
...The report calculated that households with incomes in that top 1 percent were receiving an average tax cut of $78,460 this year, while households in the middle 20 percent of earnings - averaging about $57,000 a year - were getting an average cut of only $1,090.
All this begs the larger question: Do the rich mostly spend or save?...Mr. Kerry has argued that the cuts were tilted so much in favor of the wealthy that they provided relatively little stimulus to the economy and set the stage for record budget deficits. Since 2001, the federal budget has deteriorated from a surplus of more than $100 billion to a deficit expected to exceed $400 billion in 2004.
Mr. Bush's top economic priority has been to make his tax cuts permanent, rather than letting them expire at the end of this decade as they would under current law. Mr. Kerry would seek to roll back the tax cuts for households with incomes above $200,000 a year, a move his campaign estimates would save $860 billion over 10 years, and use that money in large part to pay for a vast new national health care plan...
...According to the new report from the Congressional Budget Office, about two-thirds of the benefits from the tax cuts, enacted in 2001 and 2003, went to households in the top fifth of earnings, with an average income of $203,740....
If they save more, as a policy criteria, should the rich get the bulk of the tax cuts - especially in an anemic economy that presently requires direct stimulation of domestic demand (vs. a now oversupply of investment) to produce concommittant growth?
A detailed technical paper with extensive economic analysis and discussion on the topic by economists at the Federal Reserve, Dartmouth, and Columbia provides some answers on how much the rich save. As it turns out, a whole lot.
"Do the Rich Save More" provides a stylized analysis of data from the University of Michigan's Panel Study of Income Dynamics (PSID), the Federal Reserve's Survey of Consumer Finances (SCF), and the Bureau of Labor Statistics' Consumer Expenditure Survey (CEX).
A salient set of results are diagrammed on pp 34-35 showing a clear trend slope measuring the much greater degree (2-3 times or more) by which the rich save over those of lower- and middle-income.
Their conclusion, in part, states:
...For households aged 30-59, we consistently find that higher lifetime income households save a larger fraction of their income than lower income households. Also, there is no evidence that high lifetime income households dissave more at post-retirement ages...Whereas for the middle-class, the savings (including retirement) picture is the reverse and bleak - a University College of London and University of Chicago professor state in "Do IRAs Increase National Saving?":
...households financed their IRA contributions not from a reduction in consumption, but rather from existing saving or from planned saving. Their findings indicate that only a small fraction of IRA contributions actually represented net additions to national saving. These results should lead policymakers and researchers to reexamine tax-favored saving accounts and to determine whether the additions to household saving that are induced by tax incentives are substantial enough to justify the loss in tax revenue from the program.
...While participation in the IRA program may have increased household saving (through reduced tax liabilities), results indicate that there was little or no increase in national saving between 1982-1986. Attanasio and DeLeire also examine changes in the non-IRA financial assets of IRA contributors. They find that on average, new contributors reduced their non-IRA assets by over $1,400 compared with old contributors.
...Researchers estimate that at most 9% to 20% of the IRA contributions of new contributors represent new national saving. These figures are lower than the results found by studies that compared IRA contributors with non-IRA contributors, only using data on assets. The key policy question remaining is whether a 9% or 20% increase is a large enough percentage to justify the IRA program....
