During the 2004 presidential campaign, the Kerry campaign claimed that the federal income tax cuts passed between 2001 and 2004 shifted the burden of financing the federal government from upper‐class to middle‐class taxpayers. The purpose of this paper is to determine whether the claim made by the Kerry campaign is valid.
The assumptions made by the Kerry campaign in analyzing the data in the report Effective Federal Tax Rates Under Current Law, 2001‐2014 prepared by the Congressional Budget Office (CBO) were analyzed. It was determined that their analysis was flawed in the way they established their comparisons. The analysis was adjusted, correcting the identified flaws.
After adjusting for the flaws in the analysis by the Kerry campaign, it was determined that the tax cuts actually increased the percentage of taxes paid by the wealthiest taxpayers. Also, if the cuts are not extended, the percentage paid by the wealthiest taxpayers will decrease.
The importance of this paper is not in finding that a political party would manipulate economic data in an attempt to win an election, as this is expected in politics. The larger concern is that the CBO, a nonpartisan organization, validated the claims made by the Kerry campaign. If a nonpartisan organization is going to take a position on an issue related to politics, they need to be sure that the analysis is valid.
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