Recent analysis has made it quite clear that the Administration’s
proposal to cut the capital gains tax rate would increase income inequality
in America. As the Joint Committee on Taxation of the U.S. Congress,
among others, has convincingly shown, only the rich earn substantial
amounts of their income from capital gains and would get the overwhelming
bulk of the benefits.’ The Bush plan would seriously worsen what was already
a pronounced trend over the last decade towards using the tax system to
aggravate inequality. That is, increases in after-tax income over the last
decade are more unequally distributed than increases in before-tax income.