In previous posts I noted how government revenues increased when the Bush tax cuts were passed, because more money was taken out of savings and invested on enterprises, resulting in more tax revenue from profits. I also noted that the deficit was shrinking after the tax cuts – down to $160 billion in 2007. Not growing, but shrinking even though we were fighting two wars. I also noted that unemployment decreased when those tax cuts were passed, because more entrepreneurial activity means more hiring.
Take a look at some of the facts about the Bush tax cuts from Investors Business Daily.
Here’s a snippet: (links removed)
The rich paid more. Despite endless claims by critics that Bush’s tax cuts favored the rich, the fact is the rich ended up paying more in taxes after they went into effect.
In fact, IRS data show that the richest 1% paid $84 billion more in taxes in 2007 than they had in 2000 — that’s a 23% increase — even though their average tax rate went down.
What’s more, their share of the overall income tax burden grew, climbing from 37% in 2000 to 40% in 2007.
At the other end of the spectrum, the bottom half of taxpayers paid $6 billion less in income taxes in 2007 than they had seven years earlier — a 16% drop — and their share of the total income tax burden dropped from 3.9% to 2.9%.
Millions dropped from the tax rolls entirely. Another unheralded feature of the Bush tax cuts is that they pushed nearly 8 million people off the tax rolls entirely because, among other things, Bush doubled the per-child tax credit to $1,000 and lowered the bottom rate to 10%.
The Tax Foundation estimated that these changes benefited modest-income married couples with children, who were the ones most likely to fall from the tax rolls.
The tax cuts didn’t cause the massive deficits. Critics routinely blame the Bush tax cuts for turning surpluses late in the Clinton administration to huge deficits under Bush. Not true.
In August 2001, after the first round of the Bush tax cuts were in place, the CBO projected a surplus of $176 billion in fiscal year 2002, with surpluses continuing to grow in the following years.
[…]And after Bush signed the second round of tax cuts into law in 2003, federal deficits started to shrink. By 2007, the federal deficit was just $160 billion, and the CBO was again forecasting annual surpluses starting in 2012.
[…]Over the next decade… the middle class tax cuts that Obama wants to keep will cost $3.7 trillion, according to the CBO .
But tax cuts for the “rich” that Obama wants to abandon add up to just $824 billion.
That’s $824 billion over 10 years – but Obama has run the national debt up by $6 trillion in only 4 years. $824 billion over 10 years is chicken feed compared to that $6 trillion in debt in only 4 years.
Should we let the Bush tax cuts expire?
Here’s is Marc Thiessen in the liberal Washington Post to make the case that the tax cuts should be allowed to expire.
While the Bush tax cuts expire on Dec. 31, so do a lot of tax policies the Democrats support. For example:
- The 10 percent income tax bracket would disappear, so the lowest tax rate would be 15 percent.
- The employee share of the Social Security payroll tax would rise from 4.2 percent to 6.2 percent.
- An estimated 33 million taxpayers — many in high-tax blue states — would be required to pay the alternative minimum tax, up from 4 million who owed it in 2011.
- The child tax credit would be cut in half, from $1,000 today to $500, and would no longer be refundable for most.
- Tax preferences for alternative fuels, community development and other Democratic priorities would go away.
- And the expansions of the earned income tax credit and the dependent care credit would disappear as well.
[…]Right now, Democrats are demanding that Republicans raise taxes while Republicans are demanding that Democrats agree to cut Social Security and Medicare spending. A grand bargain this fall, then, would mean that Republicans get to raise revenue from their own supporters (small-business job creators) in exchange for cutting spending for their own supporters (seniors). Genius! Much better to wipe the slate clean, and start over with more leverage for fundamental tax reform and structural entitlement reform.
[…]During the campaign, President Obama repeatedly told us how he wants to “go back to the income tax rates we were paying under Bill Clinton — back when our economy created nearly 23 million new jobs, the biggest budget surplus in history, and plenty of millionaires to boot.” Well if the Clinton tax rates were so great, let’s go back to all of the Clinton rates and relive the booming ’90s.
At least going back to the Clinton rates would put more people on the tax rolls, and give more Americans a stake in constraining government spending. It would also force all Americans — including the middle class — to pay for growing government services, instead of borrowing the money from China and passing the costs on to the next generation.
Americans had a choice this November, and they voted for bigger government. Rather shielding voters from the consequences of their decisions, let them pay for it.
His point is that if we do nothing, then the Democrats will be tarred with having to pay for the trillions of spending that they have incurred in the last 4 years. Obama complained and complained about them, and when we repeal them and it wrecks economy, he will take the blame.
The people who voted for them have been insulated from paying for all of his spending, because it is all been passed on to children, born and unborn. Taxes have not been raised enough to pay for all the spending, it’s just been added to the debt. Maybe we should make the beneficiaries of that spending foot the bill, so that they will understand how they need to vote next time. Republicans aren’t voting for tax increases. They are just letting them expire, exactly as Obama wants. He will take the blame for this, and then people will have a real choice to make in 2016. Let the people who voted for bigger government pay the bill for bigger government.