Welcome to 201k.com - A Commonwealth Perspective.

It's funny when Market Theory collides uncomfortably with Market Reality.

April 5, 2006

Big Gain for Rich Seen in Tax Cuts for Investments

By DAVID CAY JOHNSTON

The first data to document the effect of President Bush's tax cuts for investment income show that they have significantly lowered the tax burden on the richest Americans, reducing taxes on incomes of more than $10 million by an average of about $500,000.

An analysis of Internal Revenue Service data by The New York Times found that the benefit of the lower taxes on investments was far more concentrated on the very wealthiest Americans than the benefits of Mr. Bush's two previous tax cuts: on wages and other noninvestment income.

...The Times showed the new numbers to people on various sides of the debate over tax cuts. Stephen J. Entin, president of the Institute for Research on the Economics of Taxation, a Washington organization, and other supporters of the cuts said they did not go far enough because the more money the wealthiest had to invest, the more would go to investments that produce jobs.

Did Mr. Entin say where these jobs might be produced? Because we were under the impression that businesses were obligated to lower their costs -- including labor costs -- as much as possible. Which, presumably, means that any jobs that are "produced" by tax cuts to the richest Americans will be in places where labor costs are low, like China or India.

We ask only because it strikes us as odd that America's richest citizens would defend their lowered tax burden by claiming they'll create jobs for non-Americans.

Is that, in fact, what they're claiming?