  It will be interesting to see how the campaigns deal with urlLink this grim finding : The overall income Americans reported to the government shrank for two consecutive years after the Internet stock market bubble burst in 2000, the first time that has effectively happened since the modern tax system was introduced during World War II, newly disclosed information from the Internal Revenue Service shows. The total adjusted gross income on tax returns fell 5.1 percent, to just over $6 trillion in 2002, the most recent year for which data is available, from $6.35 trillion in 2000. Because of population growth, average incomes declined even more, by 5.7 percent. Adjusted for inflation, the income of all Americans fell 9.2 percent from 2000 to 2002, according to the new I.R.S. data. The Democrats will likely have a field day with that 9.2% number. Of course, a careful review of the data show that the hit is being taken mostly by the wealthy, who have seen their capital gains wiped out in the Clinton-era market bubble. So the Republicans can retort that the rich aren't really getting richer and cannot endure the higher marginal tax rates that Kerry is promising. Also expect reasoning like this: "The expanding deficit isn't being caused by the Bush tax cuts, but rather by the lack of capital gains to tax.
" Then there's this tidbit: The stock market decline also affected the incomes of those between $1 and $5,000, which includes large numbers of children in affluent families with investments for college costs. Incomes for that group fell 7.8 percent over the two years, to $33.3 billion, as dividends fell and those who had to sell equities in the depressed market to pay tuition reaped smaller gains in 2002.
Maybe not Kerry, maybe not Edwards, but somebody in the Democratic Party will bemoan the decline in income among "the nation's children," conveniently leaving out the fact that it's really just the trust-fund babies. As is so often the case, this report has enough raw data for just about everyone to find something to support their side of the tax debate. Hopefully the distortions will not get too out of hand (I'm not optimistic). Update: Bruce Bartlett parses the data far better than I do -- see urlLink here .
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