Peter Ferrara at Forbes has an interesting op-ed staunchly defending the Bush tax cuts. He believes the American public will be shocked and dismayed to see how the 99% fare if the cuts expire. From his piece (click here to read the whole thing):
President Bush and his Congressional Republican majorities at the time cut taxes for everyone in the 2001 and 2003 tax cuts. Indeed, they cut more for lower and middle income taxpayers than they did for “the rich,” as Obama calls the nation’s job creators, investors, and successful small businesses. The top tax rate was cut by only 13%, while the lowest rate was cut by one-third, 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….
These Bush tax cuts did not explode the deficit, as Obama and his echo chamber have alleged. By 2007, the deficit was down to $160 billion, less than 15% of Obama’s deficits today. Total federal revenues soared from $793.7 billion in 2003, when the last of the Bush tax cuts were enacted, to $1.16 trillion in 2007, a 47% increase. Capital gains revenues had doubled by 2005, despite the 25% capital gains rate cut adopted in 2003. Federal revenues rose to 18.5% of GDP by 2007, above the long term, postwar, historical average over the prior 60 years. CBO was projecting surpluses to return indefinitely in 2012 through the end of its projection period in 2018.
Fascinating numbers – hopefully this piece will provoke even more discussion about what economic approach we should be taking. Ferrara does note that Bush massively increased federal spending as a percentage of GDP, which helps to explain why Democrats argue that the Bush tax cuts plunged us into more debt. But the hard-to-answer question, then and now, is how much money the government will ultimately accrue by eliminating those cuts (i.e., increasing taxes). Every policy decision has an impact not on past numbers but on future behaviors and, thus, future numbers. The size of the national income pie will not remain the same when you begin changing the size of the government’s slice.
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