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The Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003 broadly lowered income, capital gains, dividends, and estate taxes. Fanning the lie that only the rich benefited, liberal economists Peter Orszag and William Gale described the Bush tax cuts as reverse-government redistribution of wealth,
This criticism stuck so well that it is difficult to find a liberal today who doesn't believe that these tax relief measures were anything more than "tax cuts for the rich."
But the data does not support this conclusion. According to the non-partisan Congressional Budget Office (CBO), the Bush tax cuts actually shifted the total tax burden farther toward the rich so that in 2000-2004, total income tax paid by the top 40% of income-earners grew by 4.6% - to 99.1% of the total.
The second major misconception spread by the left about the Bush tax cuts is that the lower tax rates caused the federal deficit woes we face today. Speaker Nancy Pelosi (D-CA) quipped in a news conference on January 8 of this year:
In fact, the Bush tax cuts actually increased government revenue. According to economist Brian Reidl the Laffer Curve (upon which much of the supply-side theory is based) merely formalizes the common sense observations that
Consider: Policymakers expect cigarette taxes to discourage smoking - so how can they not know that high investment taxes will discourage investment and income taxes will discourage work?
So what was the effect of the Bush tax cuts? The data reveals that tax revenues in 2006 were actually $47 billion above the levels projected by the Congressional budget office before the 2003 tax cuts. The Bush tax cuts were intended to increase market incentives to work, save, and invest and thus create jobs and increase economic growth. An analysis of the six quarters before and after the 2003 tax cuts shows that this is exactly what happened.
The bottom line is that tax policy has far-reaching effects, and for decades, liberals have refused to acknowledge them. The dire consequences of higher tax burdens in times of economic weakness were made most clear when FDR raised taxes in 1937, causing a double-dip in GDP that prolonged the Great Depression.
If the Bush tax cuts are allowed to expire, recovery from the current recession will be prolonged, and we will have no one to blame but ourselves for not observing the lessons of history...
READ MORE
"[shifting] the burden of taxation away from upper-income, capital-owning households and toward the wage-earning households of the lower and middle classes."
This criticism stuck so well that it is difficult to find a liberal today who doesn't believe that these tax relief measures were anything more than "tax cuts for the rich."
But the data does not support this conclusion. According to the non-partisan Congressional Budget Office (CBO), the Bush tax cuts actually shifted the total tax burden farther toward the rich so that in 2000-2004, total income tax paid by the top 40% of income-earners grew by 4.6% - to 99.1% of the total.
The second major misconception spread by the left about the Bush tax cuts is that the lower tax rates caused the federal deficit woes we face today. Speaker Nancy Pelosi (D-CA) quipped in a news conference on January 8 of this year:
"Let me just say that the tax cuts at the high end ... have been the biggest contributor to the budget deficit."
In fact, the Bush tax cuts actually increased government revenue. According to economist Brian Reidl the Laffer Curve (upon which much of the supply-side theory is based) merely formalizes the common sense observations that
Raising tax rates discourages the taxed behavior and therefore shrinks the tax base, offsetting the revenue gains, and
Lowering tax rates encourages the taxed behavior and expands the tax base, offsetting the revenue loss.
Consider: Policymakers expect cigarette taxes to discourage smoking - so how can they not know that high investment taxes will discourage investment and income taxes will discourage work?
So what was the effect of the Bush tax cuts? The data reveals that tax revenues in 2006 were actually $47 billion above the levels projected by the Congressional budget office before the 2003 tax cuts. The Bush tax cuts were intended to increase market incentives to work, save, and invest and thus create jobs and increase economic growth. An analysis of the six quarters before and after the 2003 tax cuts shows that this is exactly what happened.
The bottom line is that tax policy has far-reaching effects, and for decades, liberals have refused to acknowledge them. The dire consequences of higher tax burdens in times of economic weakness were made most clear when FDR raised taxes in 1937, causing a double-dip in GDP that prolonged the Great Depression.
If the Bush tax cuts are allowed to expire, recovery from the current recession will be prolonged, and we will have no one to blame but ourselves for not observing the lessons of history...
READ MORE
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