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CBO claims tax system favors richest.


The House Ways and Means Committee released a new analysis by the Congressional Budget Office (CBO) of the effect of federal tax laws on annual changes in tax rates from 1977 to 1990, showing total federal taxes were reduced by $39 billion between 1977 and 1990 for the richest 1% of the population. For this group, total federal tax rates were reduced by 23%, while real incomes grew by 85% between 1977 and 1990 (see chart, below).

Critics of the CBO charge it focused only on taxes, while ignoring government transfer payments. "The bottom 40% of households receive far more in income transfers than they pay in taxes," argued the staffs of the Council of Economic Advisers and the Office of Management and Budget in a statement responding to the Ways and Means Committee.
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Publication:Journal of Accountancy
Date:May 1, 1990
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