The Pros And Cons Of The Bush Tax Cut
Nicholas Husni
The pros and cons of the Bush Tax Cut
Outline
Intro:
Introducing the topic and explaining it.
Main Body 1:
Discussing different pros of the Bush Tax Cut.
Highlighting key positive differences that came from the Bush Tax Cut.
Main Body 2:
Discussing different cons of the Bush Tax Cut.
Highlighting key negatives that came from the Bush Tax Cut.
Conclusion:
Discussion of the results of the legislation then and now.
Several momentary income tax relief methods set by former President George W. Bush in 2001 and 2003. They brought down federal income tax rates for everyone, decreased the marriage penalty, lowered capital gains taxes, lowered the tax rate on dividend income, increased …show more content…
the child tax credit from $500 to $1,000 per child, eliminated the phase out on personal exemptions for higher-income taxpayers and eliminated the phase out on itemized deductions and eliminated the estate tax. After it was set in motion there were very different views on the tax cut, some good, and some bad.
President Obama looks like he has a way to end all Bush cuts, and not just for the wealthy as he has said previously in 2008. His proposal to the Republicans is pretty much too completely reverse all cuts that the Bush cuts enabled, no exception. Even if the Republicans do not do not do what he wants, he will simply wait for it to expire for all classes then blame the
Republicans for not working with him on the matter, and for any economic issues that follow.
Since media organizations, like the New York Times and the Washington Post, have been misinforming people about the Bush tax cuts, most Americans are not familiar with what it really is despite them being implemented for more than 10 years now. President Bush and his
Congressional Republican majorities at the time cut taxes for everyone in the 2001 and 2003 tax cuts. Even though the cuts for lower and middle class people than they cut for the wealthy. The highest tax rase was just by 13%, and lowest by 33%. According to official IRS data, the top 1% of income earners paid $84 billion more in federal income taxes in 2007 than in 2000 before the
Bush tax cuts were passed, 23% more. The share of total federal income taxes paid by the top
1% rose from 37% in 2000, before the Bush tax cuts, to 40% in 2007, after the tax cuts. In contrast, the bottom half of income earners paid $6 billion less in federal income taxes in 2007 than in 2000, a decline of 16%. The share of federal income taxes paid by the bottom
50% declined from 3.9% in 2000 to 2.9% in 2007. The Bush tax cuts doubled the child tax credit which led to 8 million people falling off the federal income tax rolls completely with the help of the 33% cut in the lowest tax rate. Due to the Bush cuts, the lowest 40% of all income earners not only did not pay federal income taxes, but by 2009, the IRS was paying them equal to 10% of all federal income taxes. Although Obama and his chamber have said the Bush tax cuts did not drastically effect the deficit. By 2007, it was down to $160 billion, less than 15% of Obama’s deficits today. Total federal revenues rose from $793.7 billion in 2003, to $1.16 trillion in 2007, a 47% increase. Capital gains doubled by 2005, even with the 25% capital gains rate cut implemented in 2003. Federal revenues went up to 18.5% of GDP by 2007, higher than the average for the past 60 years. Bush raised federal expenses as a percent of GDP by one-seventh, removing the federal expenses cuts passed by the Republican Congressional majorities in the
1990s. Even so, shortfalls during Bush’s time were around 2% of GDP, one-third less than the average in the past 50 years. President Obama’s shortages have been close to 5 times as much, at
9.1% of GDP. This was trailed by a record 52 straight months of job making, creating 8 million new jobs, with the unemployment rate decreasing to 4.4%. Business investment spending, which decreased for 3 years in a row, turned around and went up by 6.7% per quarter, creating the new jobs. Due to that, work output climbed by 2.5% yearly from 2003 to 2007, higher than past averages. Resulting in real after tax income per capita increase by over 11%. Manufacturing output rose to the best it has been in 20 years. The stock market recovered, generating almost $7 trillion in new shareholder wealth. From 2003 to 2007, the S&P 500 nearly doubled. After the
Bush tax cuts began, the economy kept growing for 73 months. From 2000 to 2007, real GDP increased by over 17%, which meant an extra $2.1 trillion for Americans. Pretty much the opposite of what President Obama has done, with his neo-Marxist Obamanomics. With him; unemployment doubled, middle class earnings decreased, poverty increased, job growth was low,still stock market values, crumpling business investment, and insignificant growth in GDP.
Obviously, the Bush tax cut success was stopped by the 2008 financial catastrophe. But that was because of unnecessary overregulation of President Clinton’s home ownership promotion policies. Obama’s termination of the Bush tax cuts will reverse all good that came from those tax cuts. Ferrara, P. (2012, December 6). Why America is Going to Miss the Bush Tax Cuts. Forbes.
Retrieved from http://www.forbes.com.
The tax cuts that began under then President Bush in 2001 and 2003 have made the tax code less progressive and provided a big bonus to the highest-income taxpayers.
Tax Policy Center approximations for the years 2004 to 2012 provide us a nous of the growing effect of these tax cuts. The average tax cut for people earning over $1 million got was more than $110,000 every year over the past nine years resulting in more than $1 million in that time.The tax cuts made the tax system less progressive. In all the nine years from 2004 through 2012, the tax cuts raised the after-tax profits of the greatest income taxpayers much more than those of middle and low income taxpayers. For example, in 2010, when the Bush income and estate tax cuts were completely set in, they raised the after-tax income of individuals earning more than $1 million by over 7.3 percent, but raised the after-tax income of the middle 20 percent of households by 2.8 percent. The Bush tax cuts aimed stunning tax aids to high-income families for the past nine years. If added up, the typical tax cuts that homes with earnings between $200,000 and $500,000 got over the last nine years, the overall is over $74,000. Adding up the usual yearly tax cuts …show more content…
sent to home with profits between $500,000 and $1 million is over $189,000 within the past nine years. Adding up the average tax cuts sent to families making over $1 million every year for the past nine years surpasses $1.1 million.
The regular tax cut they got exceeded $110,000 every year for the past nine years. Since specific taxpayers’ profits change every year, taxpayers with earnings of more than $1 million in a year may not make that same amount the next. So in any given year, no families will possess the exact profit and tax liability of the average family no matter what profit group they are in, however these numbers lighten the ideas echoed in the Bush tax cuts during a time where profit disparity has already developed distinctly and the country battles unmaintainable economical shortages after the economy recuperates.
The TPC approximations reflect that every year from 2004 to 2012, the Bush tax cuts improved the after-tax profits of high-income homes more than they did for low-income homes. For example, in 2010, the year all the Bush estate, and income tax cuts were completely put in, the tax cuts increased the normal after-tax profits of the best 1 percent of families by 6.7 percent, or
$66,618. It increased the normal after-tax profit of the top 20 percent of homes by 4.6 percent or
$7,860, but increased the normal after-tax profit of the middle 20 percent of homes by
2.8 percent or $1,039. It also increased the normal after-tax returns of the bottom 20 percent of houses by just 1 percent or $99. In 2000, active tax tariffs for both rich and middle-class
Americans were already fair in compare to the tax rates that were implemented years and year ago. Nevertheless, budget excesses were predictable for several years ahead, and the Federal
Reserve Chairman notified that those excesses had the possibility to be so great that it would cause an economic issue. Officials reduced taxes to the extreme in 2001 and again in 2003, especially for the highest-income individuals. Since then, the highest-income people have been pleased with tax-cut bonuses. The usual tax cut for folks generating over $1 million a year exceeded $110,000 in every year over the past nine years. The budget excesses are long gone, and the current economic course is on the way to unmaintainable budget shortfalls. Working toward those shortages will need changing selections. Americans throughout the nation might have to give up a lot of things in a lot of ways, whether it is having to pay an increased amount for college tuition, or much higher health costs with probable costs for some Americans that have moderate profits when it comes to getting a better level of education and access to respectable health care institutions. Required funds to organization are very likely to be unavailable to those in need of them too. Basic health and scientific research could be pressured. Officials must take extending the Bush tax cuts into consideration when it comes to this matter. If the tax cuts on profits greater than $250,000 terminate, the richest taxpayers still would have been pleased with
10 yearlong receiving of bonuses, and the top two tax rates will go back to being like they were in the 1990s, when the economy produced strongly, tax rates on high-income taxpayers were still less than it was in most previous decades, and both corporations and small businesses boomed.
Huang, C. Frentz, N. (2012, July 30). Bush Tax Cuts Have Provided Extremely Large Benefits to
Wealthiest Americans Over Last Nine Years. Retrieved from http://www.cbpp.org. The economy is stooping down since buyers refuse to pay to bring it back up. It seems like the single topic the will be discussed when congress comes back from recess is “who, if anyone, should pay more taxes next year, just the very rich, everyone, or no one?” Tax cuts set by George W. Bush will perish in January, and with midterm election awaiting in November we’re about to have months of tax demagoguery. From an economic point of view pretending economics had a hand in this it is not a bad idea to keep the Bush tax cuts until 2011 for the middle class. It is impossible for buyers who cover 70 percent of the economy to begin consuming again if household’s federal income taxes increase when paying off debts is still an issue, and loaning money is not an option anymore, cannot have loads of cash at home, and are worrying about employment. This does not apply to the top money makers, making more than
250K, and only represent nearly 2 percent of tax payers. Bringing back their borderline tax rates back to how they were during the Clinton administration, at 36 and 39 percent will not stop their spending since they save and spent at will anyway. Bringing back those numbers will aid in reducing the long-term debt, banking almost a trillion dollars of revenues within the next ten years. Not enough to poke the problem, but it would not make it any worse, and at the least make financial markets aware to how serious we are about reducing the long-term debt. Economists obviously dislike increasing taxes for anyone, and state that doing that for the rich will in fact make it harder to decrease the debt. They argue that it will uninspired these people to work and invest. Inopportunely for supply-siders, the past has showed how wrong they are and always have been. From 1951 to 1980, when America’s top marginal tax rate was between 70 and 92 percent, the country’s normal yearly growth was 3.7 percent, but between 1983 and the beginning of the Great Recession, at the time where the top rate was between 35 and 39 percent the economy only increased around 3 percent per year. Supply-siders enjoy blaming Ronald
Reagan’s 1981 cuts resulting in the 1980s economic increase, but that increase was after
Reagan’s 1982 tax increase. The 1990s increase was probably not due to a tax cut but rather because of Bill Clinton’s 1993 tax increase. A final reason for letting the Bush tax cut expire for the rich is pretty basic. Even though Wall Street’s massive earnings were the immediate cause of the Great Recession, its vital cause is the nation’s widening inequality. For quite a while any gains from the economic growth in the states is going to the rich and less for the middle-class.
American were left borrowing in order to buy what they produced, and now the debt has boomed, and the underlying problem has resurfaced. George W. Bush’s 2001 tax cut was a big bonus for the rich. Around 40 percent of its benefits was given to the very low percentage of people earning more than 500K. So instead of talking about putting an end to the Bush tax cuts for the rich and put back the top marginal tax rates back to how they were under Bill Clinton, we should be talking about raising the greatest marginal tax rate to more than it was under Bill Reich, R. (2010, August 2). Why the Bush tax cut for the wealthy must go. Retrieved from http://www.salon.com.
With President Obama and Republican leaders wanting to cut the budget by trillions within the next decade, does it matter how all this happened? Beginning with good excesses in the last chapter of the Clinton era, and guaranteeing more in the future, to having shortages for nine straight years, and then the 1.3 trillion dollar slump in 2010. The obvious cause is the Bush- era tax cuts, funding the wars in Iraq and Afghanistan, and recessions. Even though antigovernment conservatives claim it, non-defense discretionary spending on foreign aid, education and food safety was not a driving factor in creating the deficits. Actually, it only accounted for a mere 15 percent of the budget. Graph number one highlights differences between budget projections and budget reality. In 2001, President George W. Bush received an excess, with predictions by the Congressional Budget Office for unlimited growing surpluses, expecting continuance of a healthy economy and President Bill Clinton’s policies. To their disappointment, every year since 2002, the budget dropped into shortage. In January 2009, before Obama began his first term in office, the budget office predicted a $1.2 trillion shortage for 2009 and shortages in following years, centered on keeping Bush’s policies and the effects of recession. Policies set by Obama 2009 and 2010 made the deficit worse but were greatly momentary. Graph number two shows that while under Bush, his tax cuts and the cost of war were two main reasons for the change from projected surplus to obvious shortages from 2002 to 2009. Economical approximations that did not predict this were too a cause to the deficits in 2001, 2008, and 2009.
Policies set by Obama that will remain until 2017 do effect the economy negatively, and do add to the shortage, but not to an extreme point. The graphs show us a few things. First, the Bush tax cuts have had an enormous destructive effect. If they expired at the end of 2012, future deficits would reduce substantially. Second, a good budget needs a good economy; recessions cause mayhem by dropping tax revenue. Government need to rush demand and generate jobs in a deep dip, even if it makes the shortage greater in the short run. Third, spending cuts alone will not close the gap. The long-lasting revenue deficits from serial tax cuts are just too large to fill with spending cuts alone, and taxes must increase. Years away, when increasing health costs along with an older populace strike the budget in full force, losses are anticipated to be much worse than what they are presently. Actual health care improvement, and a readiness for higher taxes, will decide whether or not the deficit will be reduced. Tritch, T. (2011, July 23). How the Deficit
Got This Big. Retrieved from http://www.nytimes.com.
Congress had several hearings about the President’s proposal, dividing it into separate bills. The House Ways and Means Committee held a hearing to discuss the individual rate cut proposal, and broke down the President’s plan and drafting separate bills. After the preliminary bills had passed, House Republicans made up H.R. 1836. H.R. 3 was presented in the House on
February 28, 2001. As presented, it brought down separate income taxes slowly nearly as low as the President had wished-for. The House Ways and Means Committee described the bill as basically unaffected, and it passed the House in a vote of 230-198, aquiring the support of ten
Democratic Members. The President presented his second major tax cut plan on January 7, 2003 before a meeting of the Economic Club of Chicago. Lewandoski, M. (2008, May 6). The Bush
Tax Cuts of 2001 and 2003. A Brief Legislative History. Retrieved from http://www.law.harvard.edu.
When George W. Bush first presented cutting tax rates across the board, Democrats passionately were against the whole idea. In 2001, only 12 Democratic senators out of 48 voted for the Bush tax cuts, while in the House, only 28 Democrats out of 210 voted for it. Two years later, when there was extra legislation that would reduce some rates more and speed up when other cuts started up, Democrats opposed it more than they did back in 2001 when Bush initially introduced the idea. Only two Democratic senators and 7 Democratic House members voted for the cuts.
Nancy Pelosi, then House minority leader, commented on the 2003 vote starting with this line:
“This tax cut is a tragedy.” Trinko, K. (2012, December 7). The GOP’s Tax Triumph. Retrieved from http://www.nationalreview.com. The Republican-controlled House passed legislation on a 256 to 171 vote that led to the extension of the 2001 and 2003 Bush tax cuts on income, capital gains and dividends up until the year 2013. Republicans were joined by 20 Democrats in voting for the proposal, which would extend the tax cuts for all income levels. While only one Republican voted no to extending. Sloan, S. (2012, August 1). House Votes to Extend Bush Tax Cuts. Retrieved from http://www.politico.com. References:
http://www.salon.com/2010/08/02/reich_bush_tax_cut/ http://www.forbes.com/sites/peterferrara/2012/12/06/why-america-is-going-to-miss-the-bush-tax-cuts/ http://www.cbpp.org/cms/?fa=view&id=3811 http://www.nytimes.com/2011/07/24/opinion/sunday/24sun4.html http://www.law.harvard.edu/faculty/hjackson/2001-2003TaxCuts_37.pdf http://www.nationalreview.com/articles/334947/gop-s-tax-triumph-katrina-trinko http://www.politico.com/news/stories/0812/79289.html
The pros and cons of the Bush Tax Cut
Outline
Intro:
Introducing the topic and explaining it.
Main Body 1:
Discussing different pros of the Bush Tax Cut.
Highlighting key positive differences that came from the Bush Tax Cut.
Main Body 2:
Discussing different cons of the Bush Tax Cut.
Highlighting key negatives that came from the Bush Tax Cut.
Conclusion:
Discussion of the results of the legislation then and now.
Several momentary income tax relief methods set by former President George W. Bush in 2001 and 2003. They brought down federal income tax rates for everyone, decreased the marriage penalty, lowered capital gains taxes, lowered the tax rate on dividend income, increased …show more content…
the child tax credit from $500 to $1,000 per child, eliminated the phase out on personal exemptions for higher-income taxpayers and eliminated the phase out on itemized deductions and eliminated the estate tax. After it was set in motion there were very different views on the tax cut, some good, and some bad.
President Obama looks like he has a way to end all Bush cuts, and not just for the wealthy as he has said previously in 2008. His proposal to the Republicans is pretty much too completely reverse all cuts that the Bush cuts enabled, no exception. Even if the Republicans do not do not do what he wants, he will simply wait for it to expire for all classes then blame the
Republicans for not working with him on the matter, and for any economic issues that follow.
Since media organizations, like the New York Times and the Washington Post, have been misinforming people about the Bush tax cuts, most Americans are not familiar with what it really is despite them being implemented for more than 10 years now. President Bush and his
Congressional Republican majorities at the time cut taxes for everyone in the 2001 and 2003 tax cuts. Even though the cuts for lower and middle class people than they cut for the wealthy. The highest tax rase was just by 13%, and lowest by 33%. According to official IRS data, the top 1% of income earners paid $84 billion more in federal income taxes in 2007 than in 2000 before the
Bush tax cuts were passed, 23% more. The share of total federal income taxes paid by the top
1% rose from 37% in 2000, before the Bush tax cuts, to 40% in 2007, after the tax cuts. In contrast, the bottom half of income earners paid $6 billion less in federal income taxes in 2007 than in 2000, a decline of 16%. The share of federal income taxes paid by the bottom
50% declined from 3.9% in 2000 to 2.9% in 2007. The Bush tax cuts doubled the child tax credit which led to 8 million people falling off the federal income tax rolls completely with the help of the 33% cut in the lowest tax rate. Due to the Bush cuts, the lowest 40% of all income earners not only did not pay federal income taxes, but by 2009, the IRS was paying them equal to 10% of all federal income taxes. Although Obama and his chamber have said the Bush tax cuts did not drastically effect the deficit. By 2007, it was down to $160 billion, less than 15% of Obama’s deficits today. Total federal revenues rose from $793.7 billion in 2003, to $1.16 trillion in 2007, a 47% increase. Capital gains doubled by 2005, even with the 25% capital gains rate cut implemented in 2003. Federal revenues went up to 18.5% of GDP by 2007, higher than the average for the past 60 years. Bush raised federal expenses as a percent of GDP by one-seventh, removing the federal expenses cuts passed by the Republican Congressional majorities in the
1990s. Even so, shortfalls during Bush’s time were around 2% of GDP, one-third less than the average in the past 50 years. President Obama’s shortages have been close to 5 times as much, at
9.1% of GDP. This was trailed by a record 52 straight months of job making, creating 8 million new jobs, with the unemployment rate decreasing to 4.4%. Business investment spending, which decreased for 3 years in a row, turned around and went up by 6.7% per quarter, creating the new jobs. Due to that, work output climbed by 2.5% yearly from 2003 to 2007, higher than past averages. Resulting in real after tax income per capita increase by over 11%. Manufacturing output rose to the best it has been in 20 years. The stock market recovered, generating almost $7 trillion in new shareholder wealth. From 2003 to 2007, the S&P 500 nearly doubled. After the
Bush tax cuts began, the economy kept growing for 73 months. From 2000 to 2007, real GDP increased by over 17%, which meant an extra $2.1 trillion for Americans. Pretty much the opposite of what President Obama has done, with his neo-Marxist Obamanomics. With him; unemployment doubled, middle class earnings decreased, poverty increased, job growth was low,still stock market values, crumpling business investment, and insignificant growth in GDP.
Obviously, the Bush tax cut success was stopped by the 2008 financial catastrophe. But that was because of unnecessary overregulation of President Clinton’s home ownership promotion policies. Obama’s termination of the Bush tax cuts will reverse all good that came from those tax cuts. Ferrara, P. (2012, December 6). Why America is Going to Miss the Bush Tax Cuts. Forbes.
Retrieved from http://www.forbes.com.
The tax cuts that began under then President Bush in 2001 and 2003 have made the tax code less progressive and provided a big bonus to the highest-income taxpayers.
Tax Policy Center approximations for the years 2004 to 2012 provide us a nous of the growing effect of these tax cuts. The average tax cut for people earning over $1 million got was more than $110,000 every year over the past nine years resulting in more than $1 million in that time.The tax cuts made the tax system less progressive. In all the nine years from 2004 through 2012, the tax cuts raised the after-tax profits of the greatest income taxpayers much more than those of middle and low income taxpayers. For example, in 2010, when the Bush income and estate tax cuts were completely set in, they raised the after-tax income of individuals earning more than $1 million by over 7.3 percent, but raised the after-tax income of the middle 20 percent of households by 2.8 percent. The Bush tax cuts aimed stunning tax aids to high-income families for the past nine years. If added up, the typical tax cuts that homes with earnings between $200,000 and $500,000 got over the last nine years, the overall is over $74,000. Adding up the usual yearly tax cuts …show more content…
sent to home with profits between $500,000 and $1 million is over $189,000 within the past nine years. Adding up the average tax cuts sent to families making over $1 million every year for the past nine years surpasses $1.1 million.
The regular tax cut they got exceeded $110,000 every year for the past nine years. Since specific taxpayers’ profits change every year, taxpayers with earnings of more than $1 million in a year may not make that same amount the next. So in any given year, no families will possess the exact profit and tax liability of the average family no matter what profit group they are in, however these numbers lighten the ideas echoed in the Bush tax cuts during a time where profit disparity has already developed distinctly and the country battles unmaintainable economical shortages after the economy recuperates.
The TPC approximations reflect that every year from 2004 to 2012, the Bush tax cuts improved the after-tax profits of high-income homes more than they did for low-income homes. For example, in 2010, the year all the Bush estate, and income tax cuts were completely put in, the tax cuts increased the normal after-tax profits of the best 1 percent of families by 6.7 percent, or
$66,618. It increased the normal after-tax profit of the top 20 percent of homes by 4.6 percent or
$7,860, but increased the normal after-tax profit of the middle 20 percent of homes by
2.8 percent or $1,039. It also increased the normal after-tax returns of the bottom 20 percent of houses by just 1 percent or $99. In 2000, active tax tariffs for both rich and middle-class
Americans were already fair in compare to the tax rates that were implemented years and year ago. Nevertheless, budget excesses were predictable for several years ahead, and the Federal
Reserve Chairman notified that those excesses had the possibility to be so great that it would cause an economic issue. Officials reduced taxes to the extreme in 2001 and again in 2003, especially for the highest-income individuals. Since then, the highest-income people have been pleased with tax-cut bonuses. The usual tax cut for folks generating over $1 million a year exceeded $110,000 in every year over the past nine years. The budget excesses are long gone, and the current economic course is on the way to unmaintainable budget shortfalls. Working toward those shortages will need changing selections. Americans throughout the nation might have to give up a lot of things in a lot of ways, whether it is having to pay an increased amount for college tuition, or much higher health costs with probable costs for some Americans that have moderate profits when it comes to getting a better level of education and access to respectable health care institutions. Required funds to organization are very likely to be unavailable to those in need of them too. Basic health and scientific research could be pressured. Officials must take extending the Bush tax cuts into consideration when it comes to this matter. If the tax cuts on profits greater than $250,000 terminate, the richest taxpayers still would have been pleased with
10 yearlong receiving of bonuses, and the top two tax rates will go back to being like they were in the 1990s, when the economy produced strongly, tax rates on high-income taxpayers were still less than it was in most previous decades, and both corporations and small businesses boomed.
Huang, C. Frentz, N. (2012, July 30). Bush Tax Cuts Have Provided Extremely Large Benefits to
Wealthiest Americans Over Last Nine Years. Retrieved from http://www.cbpp.org. The economy is stooping down since buyers refuse to pay to bring it back up. It seems like the single topic the will be discussed when congress comes back from recess is “who, if anyone, should pay more taxes next year, just the very rich, everyone, or no one?” Tax cuts set by George W. Bush will perish in January, and with midterm election awaiting in November we’re about to have months of tax demagoguery. From an economic point of view pretending economics had a hand in this it is not a bad idea to keep the Bush tax cuts until 2011 for the middle class. It is impossible for buyers who cover 70 percent of the economy to begin consuming again if household’s federal income taxes increase when paying off debts is still an issue, and loaning money is not an option anymore, cannot have loads of cash at home, and are worrying about employment. This does not apply to the top money makers, making more than
250K, and only represent nearly 2 percent of tax payers. Bringing back their borderline tax rates back to how they were during the Clinton administration, at 36 and 39 percent will not stop their spending since they save and spent at will anyway. Bringing back those numbers will aid in reducing the long-term debt, banking almost a trillion dollars of revenues within the next ten years. Not enough to poke the problem, but it would not make it any worse, and at the least make financial markets aware to how serious we are about reducing the long-term debt. Economists obviously dislike increasing taxes for anyone, and state that doing that for the rich will in fact make it harder to decrease the debt. They argue that it will uninspired these people to work and invest. Inopportunely for supply-siders, the past has showed how wrong they are and always have been. From 1951 to 1980, when America’s top marginal tax rate was between 70 and 92 percent, the country’s normal yearly growth was 3.7 percent, but between 1983 and the beginning of the Great Recession, at the time where the top rate was between 35 and 39 percent the economy only increased around 3 percent per year. Supply-siders enjoy blaming Ronald
Reagan’s 1981 cuts resulting in the 1980s economic increase, but that increase was after
Reagan’s 1982 tax increase. The 1990s increase was probably not due to a tax cut but rather because of Bill Clinton’s 1993 tax increase. A final reason for letting the Bush tax cut expire for the rich is pretty basic. Even though Wall Street’s massive earnings were the immediate cause of the Great Recession, its vital cause is the nation’s widening inequality. For quite a while any gains from the economic growth in the states is going to the rich and less for the middle-class.
American were left borrowing in order to buy what they produced, and now the debt has boomed, and the underlying problem has resurfaced. George W. Bush’s 2001 tax cut was a big bonus for the rich. Around 40 percent of its benefits was given to the very low percentage of people earning more than 500K. So instead of talking about putting an end to the Bush tax cuts for the rich and put back the top marginal tax rates back to how they were under Bill Clinton, we should be talking about raising the greatest marginal tax rate to more than it was under Bill Reich, R. (2010, August 2). Why the Bush tax cut for the wealthy must go. Retrieved from http://www.salon.com.
With President Obama and Republican leaders wanting to cut the budget by trillions within the next decade, does it matter how all this happened? Beginning with good excesses in the last chapter of the Clinton era, and guaranteeing more in the future, to having shortages for nine straight years, and then the 1.3 trillion dollar slump in 2010. The obvious cause is the Bush- era tax cuts, funding the wars in Iraq and Afghanistan, and recessions. Even though antigovernment conservatives claim it, non-defense discretionary spending on foreign aid, education and food safety was not a driving factor in creating the deficits. Actually, it only accounted for a mere 15 percent of the budget. Graph number one highlights differences between budget projections and budget reality. In 2001, President George W. Bush received an excess, with predictions by the Congressional Budget Office for unlimited growing surpluses, expecting continuance of a healthy economy and President Bill Clinton’s policies. To their disappointment, every year since 2002, the budget dropped into shortage. In January 2009, before Obama began his first term in office, the budget office predicted a $1.2 trillion shortage for 2009 and shortages in following years, centered on keeping Bush’s policies and the effects of recession. Policies set by Obama 2009 and 2010 made the deficit worse but were greatly momentary. Graph number two shows that while under Bush, his tax cuts and the cost of war were two main reasons for the change from projected surplus to obvious shortages from 2002 to 2009. Economical approximations that did not predict this were too a cause to the deficits in 2001, 2008, and 2009.
Policies set by Obama that will remain until 2017 do effect the economy negatively, and do add to the shortage, but not to an extreme point. The graphs show us a few things. First, the Bush tax cuts have had an enormous destructive effect. If they expired at the end of 2012, future deficits would reduce substantially. Second, a good budget needs a good economy; recessions cause mayhem by dropping tax revenue. Government need to rush demand and generate jobs in a deep dip, even if it makes the shortage greater in the short run. Third, spending cuts alone will not close the gap. The long-lasting revenue deficits from serial tax cuts are just too large to fill with spending cuts alone, and taxes must increase. Years away, when increasing health costs along with an older populace strike the budget in full force, losses are anticipated to be much worse than what they are presently. Actual health care improvement, and a readiness for higher taxes, will decide whether or not the deficit will be reduced. Tritch, T. (2011, July 23). How the Deficit
Got This Big. Retrieved from http://www.nytimes.com.
Congress had several hearings about the President’s proposal, dividing it into separate bills. The House Ways and Means Committee held a hearing to discuss the individual rate cut proposal, and broke down the President’s plan and drafting separate bills. After the preliminary bills had passed, House Republicans made up H.R. 1836. H.R. 3 was presented in the House on
February 28, 2001. As presented, it brought down separate income taxes slowly nearly as low as the President had wished-for. The House Ways and Means Committee described the bill as basically unaffected, and it passed the House in a vote of 230-198, aquiring the support of ten
Democratic Members. The President presented his second major tax cut plan on January 7, 2003 before a meeting of the Economic Club of Chicago. Lewandoski, M. (2008, May 6). The Bush
Tax Cuts of 2001 and 2003. A Brief Legislative History. Retrieved from http://www.law.harvard.edu.
When George W. Bush first presented cutting tax rates across the board, Democrats passionately were against the whole idea. In 2001, only 12 Democratic senators out of 48 voted for the Bush tax cuts, while in the House, only 28 Democrats out of 210 voted for it. Two years later, when there was extra legislation that would reduce some rates more and speed up when other cuts started up, Democrats opposed it more than they did back in 2001 when Bush initially introduced the idea. Only two Democratic senators and 7 Democratic House members voted for the cuts.
Nancy Pelosi, then House minority leader, commented on the 2003 vote starting with this line:
“This tax cut is a tragedy.” Trinko, K. (2012, December 7). The GOP’s Tax Triumph. Retrieved from http://www.nationalreview.com. The Republican-controlled House passed legislation on a 256 to 171 vote that led to the extension of the 2001 and 2003 Bush tax cuts on income, capital gains and dividends up until the year 2013. Republicans were joined by 20 Democrats in voting for the proposal, which would extend the tax cuts for all income levels. While only one Republican voted no to extending. Sloan, S. (2012, August 1). House Votes to Extend Bush Tax Cuts. Retrieved from http://www.politico.com. References:
http://www.salon.com/2010/08/02/reich_bush_tax_cut/ http://www.forbes.com/sites/peterferrara/2012/12/06/why-america-is-going-to-miss-the-bush-tax-cuts/ http://www.cbpp.org/cms/?fa=view&id=3811 http://www.nytimes.com/2011/07/24/opinion/sunday/24sun4.html http://www.law.harvard.edu/faculty/hjackson/2001-2003TaxCuts_37.pdf http://www.nationalreview.com/articles/334947/gop-s-tax-triumph-katrina-trinko http://www.politico.com/news/stories/0812/79289.html