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Slight Progress on Poverty Rate and
Median Income Since 2001 Recession

First Things First:  The President's Budget Makes the Wrong Choices for WV

NEWS RELEASE

October 22, 2006

New Study Finds Most West Virginians Pay For Federal Tax Cuts
 That Only Benefit the Rich

(Charleston) A new report finds that all but the wealthiest West Virginians will be worse off because of tax cuts enacted by Congress at the behest of the Bush Administration. The study, by the non-partisan Citizens for Tax Justice, analyzes the net impact on West Virginians at various income levels of deficit-financed tax reductions approved over the last six years.

“This report gives West Virginians a compelling reason to insist on significant changes in our federal tax policy,” said Ted Boettner, policy and research analyst with the Mountain State Education & Research Foundation, a public policy research group based in Charleston. “Since only extremely wealthy West Virginians will see a net gain from the tax cuts, most West Virginians should be concerned that they are helping to pay for tax cuts from which they ultimately do not benefit,” he added.

Since 2001, Congress has approved a host of Administration-sponsored tax cuts that include capital gains and dividends tax breaks, reductions in personal income tax rates, cuts in the federal estate tax, and expansion of the number and nature of corporate tax loopholes. These tax cuts have been primarily paid for with borrowed funds, increasing the national debt. The report, The Bush Tax Cuts: Are West Virginians Better Off?, quantifies the cost to taxpayers of repaying the borrowed funds.

The report finds that West Virginians at all income levels except the top one percent are expected to suffer an average net loss of $6,949 per person due to the fiscal policies in place between 2001 and 2006. Put another way, for 99 percent of West Virginians, the added debt they incur exceeds the tax cut benefits. This finding is based on an accounting of tax benefits accrued at various income levels from 2001 to 2006, minus a share of the debt that has accumulated over the period as a result of the tax cuts.

Only the wealthiest West Virginians, those with an average annual income of over $500,000, are winners. The Citizens for Tax Justice study finds that if just the net tax benefits over the last five years are considered, West Virginias in the top 1 percent income group – those with an average annual income of $529,700 – will realize an average net benefit of $4,257 per person.

The study also looked at the 10-year impact of the tax cuts. Over the decade of 2001-2010, a disproportionate share of the tax benefits – 20 percent of the benefits – go to the wealthiest one percent of West Virginians, and they receive an average annual tax cut of $17,407.

Mountain State Education & Research Foundation strives to put the public policy process back into citizen’s hands though its commitment to social justice and economic fairness in West Virginia.

The Bush Tax Cuts: Are West Virginians Better Off? is available on the web at
http://www.ctj.org/pdf/bushtaxcutswv.pdf.