An editorial in the March 13, 2003 Wall Street Journal repeats the Bush administration’s claim that the President’s proposal to eliminate taxes on dividends would be a bonanza for the elderly. That’s not true.
The administration and the Journal get only one, irrelevant statistic right: almost half of taxable dividends are received by seniors. But there are a number of other, more telling facts that the administration and the Journal choose to ignore. To wit:
■ Three-quarters of the elderly would get absolutely nothing from Bush’s proposed dividend tax exemption. That’s because only one in four seniors receives even a dollar in taxable dividends.
■ For the 70 percent of elderly taxpayers with incomes below $50,000, the average dividend tax cut would be only $44.
■ Most of the taxes on dividends paid by the elderly are paid by the richest 2.7 percent of elderly taxpayers, those with incomes in excess of $200,000.
So do seniors “have a special stake” in Bush’s dividend tax exemption, as the Journal asserts? Only if they’re rich. The vast majority of seniors would be better off with almost any other use of the $396 billion that the dividend exemption would cost over the next ten years.
| Taxable Dividends & the Elderly in 2003 | Income range | # of elderly (mill) |
% of elderly |
Taxable Dividends | Tax on div $-bill |
% with tax on div | Ave div tax paid |
| # w/ (mill) | $-bill | ||||||
| < $50K | 16.8 | 70.1% | 2.3 | $ 6.8 | $ 0.7 | 13.9% | $ 44 |
| $50–100K | 4.8 | 20.2% | 2.3 | 11.4 | 2.6 | 48.3% | 545 |
| $100–200K | 1.6 | 6.5% | 1.2 | 12.1 | 3.1 | 75.8% | 1,986 |
| $200K+ | 0.7 | 2.7% | 0.6 | 26.5 | 8.1 | 87.7% | 12,382 |
| 24.0 | 100.0% | 6.4 | |
$ 14.6 | |
$ 610 | |
| |
17.8% | 26.2% | 48.1% | 46.7% | |||
| Source: Institute on Taxation and Economic Policy Tax Model, February 2003. | |||||||
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