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From today's Tax Notes, a subscription service for tax lawyers:

The Bush tax cuts have placed a growing federal tax burden on middle-income taxpayers while relieving the tax obligations of the highest-income taxpayers, according to a report released by the Congressional Budget Office August 13.

The CBO found that under current law, the wealthiest 1 percent of taxpayers -- those with an average income of over $1 million -- would see their total effective tax rate fall from 33 percent in 2001 to 26.7 percent in 2004. The CBO estimates that without the tax cuts of 2001, 2002, and 2003, those taxpayers' effective tax rate would have held steady at 33.4 percent. (All figures are based on the extrapolation of 2001 incomes, not actual incomes for the subsequent years.)

At the same time, the group politicians refer to as the middle class -- that is, the 60 percent of Americans with incomes that fall in the middle -- will see its effective tax rate reduced by less than 1 percentage point under the Bush tax cuts. However, the CBO estimates that without those cuts, middle-income taxpayers would have seen their effective rates actually rise by almost a percentage point.

But the report also indicates that those middle-income taxpayers are taking on a higher percentage of the federal tax burden. In 2001 the wealthiest 10 percent of taxpayers paid 50 percent of the total federal tax bill, a figure that would drop to 47.6 percent in 2004. Under 2000 law, that top 10 percent would have seen its burden drop by less than 1 percentage point from 49.1 to 48.7 percent. Meanwhile, the 60 percent of Americans in the middle would be responsible for 35.2 percent of federal taxes in 2004 with the Bush cuts, but only 34.6 without.

The analysis was requested by the ranking Democratic members on several key congressional committees.

"The Republicans will spin until they're dizzy, but the facts show the single biggest reason for the skyrocketing deficit is the Bush Administration's economic policies," said House Ways and Means ranking minority member Charles B. Rangel, D-N.Y., in a statement. "The overall effect of Bush tax cuts has been a shifting of the tax burden to middle-class families and to future generations."

Democrats and liberal think tanks have long been claiming the Bush tax cuts were geared toward the rich -- Sen. John F. Kerry. D-Mass., Democratic presidential nominee, has promised to repeal several provisions if elected -- but a report from a nonpartisan congressional office may appear to lend them more weight. The CBO numbers, however, give both parties plenty of room to wiggle.

An e-mail sent by the Bush campaign pointed out the report showed that "under President Bush's tax cuts, the share of individual income taxes paid by the bottom 80 percent of earners declined by more than 17 percent, while the percentage paid by higher-income earners increased."

If only the percentage of income tax paid is taken into account, not the total share of all federal taxes, then results indeed look more progressive. According to the CBO, the wealthiest 1 percent of taxpayers should cover an estimated 32.3 percent of individual income tax liabilities in 2004 under current law, but would actually have paid only 31.6 percent without the Bush tax cuts.

Republicans on the Joint Economic Committee sent out a release praising the CBO results. "As a result of the tax cuts since 2001, all taxpayers face lower effective federal income tax rates than they would have without the tax cuts," the statement said. "The overwhelming majority of federal income taxes are paid by the very highest income earners. The top 1 percent of income earners pays 31.6 percent of all income taxes, the top 5 percent pays 51.4 percent, the top 10 percent pays 63.5 percent, and the top 20 percent of income earners pays 78.4 percent of all federal income taxes. The bottom four-fifths of income earners pay just over one-fifth of all federal income taxes."

But Democrats insist income tax numbers are meaningless and that the more important number is the total effective federal tax rate, which the CBO says "is the total federal taxes that people bear as a percentage of their income." It takes into account payroll taxes, excise taxes on such things as gasoline or alcohol, and the burden of taxes levied against businesses that actually falls on households.

Regardless of who wins the war of numbers, the rising debate over the Bush tax cuts may spoil recent Republican overtures at major tax reform in 2005. (For related coverage, see Doc 2004-16364 [PDF] or 2004 TNT 156-1 .)