the great divide

As the rich get richer, we all know what happens to the poor.

The richest 1% of households -- those with incomes above $237,000 for 2003, the latest year analyzed -- owned 57.5% of all income from capital gains, dividends, interest and rents in 2003, the Congressional Budget Office analysis found. That was up from 53.4% the year before and 38.7% in 1991.

Long-term capital gains were taxed at 28% until 1997, and at 20% until 2003, when rates were cut to 15%. The top rate on stock dividends was cut to 15% from 35% that year.

The poorest fifth of Americans owned 0.6% of corporate wealth in 2003, down from 1.4 percent in 1991.

The CBO analysis excludes the stock held in retirement accounts such as 401(k)s and IRAs, which isn’t subject to taxation and was thus unaffected by the tax cuts.

Although these tax cuts are slated to expire in 2008, Congress is already debating whether to extend them through 2010. The Bush administration has been calling for the cuts to be extended or made permanent.

An analysis by the Urban-Brookings Tax Policy Center found that an extension of the tax cuts would save households with incomes under $50,000 about $11 in 2009. Those with incomes above $1 million would save about $32,000.

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