2010-03-05 Lying About Bush's Tax Cuts
Lying About Bush's Tax Cuts
The majority of the taxpayers in our country believe it a foregone conclusion that taxes will rise substantially in the near future and that the Bush tax cuts will soon be no more than a footnote of political history. You don't need to be a genius to see that the government will have to raise more revenue to pay for seemingly infinite spending, but before we resign ourselves to higher taxes, we should consider defending the Bush tax cuts against the left.
Two of the most oft-cited objections to the Bush tax cuts by the left are that it helped only the rich and it was largely responsible for the federal deficit at the end of the Bush presidency. Instead, it is true that if the current administration allows any or all of the Bush tax cuts to expire, economic growth will be slowed and tax revenue could actually decrease, perpetuating our deficit dilemma.
The "American Thinker" article is, unsurprisingly, full about rather silly assertions that have a single thing in common: they support the Aristocracy.
Its first chart purports to "prove" that it's a lie that the Bush tax cuts shifted tax burdens from the rich, by claiming that the income tax AMOUNT paid by the rich increased 2000-2004. But this effect, if true, is largely explained by in increase in income inequality; as people get richer, they pay more in taxes and people fall into poverty, the amount of taxes they pay decreases and therefore the share paid by the remaining taxpayers increases. The share of after-tax income going to the top 1% rose from 12.2% in 2003 to 14.0% in 2004, an incease of more than 10 percent, so it's unsurprising that their share of taxes paid should have gone up by 1 or 2 per cent. Likewise, Poverty increased about 20% in the Bush years, from a rate of about 11% when he entered office to about 13% when he left.
Similar effects obtained for other non-wealthy income cohorts.
The article also says something silly about the amount of tax revenue being higher than someone anticipated, therefore the tax cuts created more revenue. That is on the face of it a non sequitur since economic reality is more complex. Bush's massive deficits had a side-effect of increasing income tax revenue, since deficit spending is income to *someone* and that someone pays part of that income as income tax. Given that Bush's deficits ranged from 3 to 5 percent of GDP, this may explain much of the the article's claimed $47 billion increase in revenue amount.
The third most laughable claim of the article is that the wealthy are the most productive members of society. That's simply truckling to the Aristocracy. Wall Street gamblers are a net loss to the economy; the minor role they play in helping allocate resources is overwhelmed by the harm they do in making the real economy the servant of financial transactions. It reminds me of the claim that Soviet Commissars are the most productive members of society because they organize the labor of the masses.
“You don't need to be a genius to see that the government will have to raise more revenue to pay for seemingly infinite spending, but before we resign ourselves to higher taxes, we should consider defending the Bush tax cuts against the left.”