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Old April 9th, 2011, 01:35 PM   #1
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Nearly all of the conventional wisdom about the Bush tax cuts is wrong. In reality:



1. The tax cuts have not substantially reduced current tax revenues, which were in fact not far from the 2000 pre-tax cut baseline and over the 2003 pre-tax cut baseline in 2006;

2. The increased child tax credit, 10 percent tax bracket, and fix of the alternative minimum tax (AMT) reduced tax revenues much more than most of the "tax cuts for the rich";

3. Economic growth rates have more than doubled since the 2003 tax cuts; and

4. The tax cuts shifted even more of the income tax burden toward the rich.Setting optimal tax policy requires governing with facts rather than popular mythology, which is why it is important to set the record straight by debunking 10 myths about the Bush tax cuts.



Ten Myths About the Bush Tax Cuts-and the Facts



Myth #1: Tax revenues remain low.

Fact: Tax revenues are above the historical average, even after the tax cuts.



Myth #2: The Bush tax cuts substantially reduced 2006 revenues and expanded the budget deficit.

Fact: Nearly all of the 2006 budget deficit resulted from additional spending above the baseline.



Myth #3: Supply-side economics assumes that all tax cuts immediately pay for themselves.

Fact: It assumes replenishment of some but not necessarily all lost revenues.



Myth #4: Capital gains tax cuts do not pay for themselves.

Fact: Capital gains tax revenues doubled following the 2003 tax cut.



I thought it might prove interesting to throw this topic out and see what occurs. Hmmmm. What could possibly be the result? For more about the myths and a more detailed explanation and charts, please go to the following link:http://heritage.org/...e-Bush-Tax-Cuts
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Old April 10th, 2011, 12:18 PM   #2
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Originally Posted by LesGovt View Post
Nearly all of the conventional wisdom about the Bush tax cuts is wrong. In reality:



1. The tax cuts have not substantially reduced current tax revenues, which were in fact not far from the 2000 pre-tax cut baseline and over the 2003 pre-tax cut baseline in 2006;

2. The increased child tax credit, 10 percent tax bracket, and fix of the alternative minimum tax (AMT) reduced tax revenues much more than most of the "tax cuts for the rich";

3. Economic growth rates have more than doubled since the 2003 tax cuts; and

4. The tax cuts shifted even more of the income tax burden toward the rich.Setting optimal tax policy requires governing with facts rather than popular mythology, which is why it is important to set the record straight by debunking 10 myths about the Bush tax cuts.



Ten Myths About the Bush Tax Cuts-and the Facts



Myth #1: Tax revenues remain low.

Fact: Tax revenues are above the historical average, even after the tax cuts.



Myth #2: The Bush tax cuts substantially reduced 2006 revenues and expanded the budget deficit.

Fact: Nearly all of the 2006 budget deficit resulted from additional spending above the baseline.



Myth #3: Supply-side economics assumes that all tax cuts immediately pay for themselves.

Fact: It assumes replenishment of some but not necessarily all lost revenues.



Myth #4: Capital gains tax cuts do not pay for themselves.

Fact: Capital gains tax revenues doubled following the 2003 tax cut.



I thought it might prove interesting to throw this topic out and see what occurs. Hmmmm. What could possibly be the result? For more about the myths and a more detailed explanation and charts, please go to the following link:http://heritage.org/...e-Bush-Tax-Cuts




Apparently, all that love I was feeling has dissipated.
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Old April 10th, 2011, 06:55 PM   #3
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It's moot, but let's have dueling tax cut articles!! And please, don't shoot the messenger....



Quote:


Five Myths about the Bush Tax Cut



William G. Gale



The Washington Post, August 1, 2010


[font="'Trebuchet MS"]

[/font]The cuts lowered tax rates across the board on income, dividends and capital gains; eventually eliminated the estate tax; further lowered burdens on married couples, parents and the working poor; and increased tax credits for education and retirement savings. Obama's proposal would extend most of these reductions, allowing only those for individuals making more than $200,000 and families making more than $250,000 to expire.



Complicating the debate is a gloomy economic and fiscal outlook, one that is decidedly different from the rosy scenario that prevailed at the beginning of the last decade. That outlook has given rise to a number of stubborn myths about what extending the Bush tax cuts would -- or wouldn't -- do.



1. Extending the tax cuts would be a good way to stimulate the economy.



As a stimulus measure, a one- or two-year extension has one thing going for it -- it would be a big intervention and would provide at least some boost to the economy. But a good stimulus policy can't just be big; it should also offer a lot of bang for the buck. That is, each dollar of government spending or tax cuts should have the largest possible effect on the economy. According to the Congressional Budget Office and other authorities, extending all of the Bush tax cuts would have a small bang for the buck, the equivalent of a 10- to 40-cent increase in GDP for every dollar spent.



Why? As the CBO notes, most Bush tax cut dollars go to higher-income households, and these top earners don't spend as much of their income as lower earners. In fact, of 11 potential stimulus policies the CBO recently examined, an extension of all of the Bush tax cuts ties for lowest bang for the buck. (The CBO did not examine the high-income tax cuts separately, but the logic it used suggests that extending those cuts alone would have even less value.) The government could more effectively stimulate the economy by letting the high-income tax cuts expire and using the money for aid to the states, extensions of unemployment insurance benefits and tax credits favoring job creation. Dollar for dollar, each of these measures would have about three times the impact on GDP as continuing the Bush tax cuts.



2. Allowing the high-income tax cuts to expire would hurt small businesses.



One of the most common objections to letting the cuts expire for those in the highest tax brackets is that it would hurt small businesses. As Sen. Orrin Hatch (R-Utah) recently put it, allowing the cuts to lapse would amount to "a job-killing tax hike on small business during tough economic times."



This claim is misleading. If, as proposed, the Bush tax cuts are allowed to expire for the highest earners, the vast majority of small businesses will be unaffected. Less than 2 percent of tax returns reporting small-business income are filed by taxpayers in the top two income brackets -- individuals earning more than about $170,000 a year and families earning more than about $210,000 a year.



And just as most small businesses aren't owned by people in the top income brackets, most people in the top income brackets don't rely mainly on small-business income: According to the Tax Policy Center, such proceeds make up a majority of income for about 40 percent of households in the top income bracket and a third of households in the second-highest bracket. If the objective is to help small businesses, continuing the Bush tax cuts on high-income taxpayers isn't the way to go -- it would miss more than 98 percent of small-business owners and would primarily help people who don't make most of their money off those businesses.



3. Making the tax cuts permanent will lead to long-term growth.



A main selling point for the cuts was that, by offering lower marginal tax rates on wages, dividends and capital gains, they would encourage investment and therefore boost economic growth. But when it comes to fostering growth, this isn't the whole story. The tax cuts also raised government debt -- and higher government debt leads to higher interest rates. If estimates of this relationship -- by former Bush Council of Economic Advisers chair Glenn Hubbard and Federal Reserve economist Eric Engen, and byoutgoing Office of Management and Budget Director Peter Orszag and myself -- are accurate, then the tax cuts have raised the cost of making new investments. As the economy recovers and private borrowing rises, the upward pressure on interest rates is likely to grow even stronger.



I have used standard growth and investment formulas to calculate that the overall effect of the Bush tax cuts on economic growth has therefore been negative -- and it will continue to be negative if the cuts are extended.



4. The Bush tax cuts are the main cause of the budget deficit.



Although the cuts were large and drove revenue down sharply, they are not the main cause of the sizable deficit that exists today. In 2007, well after the tax cuts took effect, the budget deficit stood at 1.2 percent of GDP. By 2009, it had increased to 9.9 percent of the economy. The Bush tax cuts didn't change between 2007 and 2009, so clearly something else is to blame.



The main culprit was the recession -- and the responses it inspired. As the economy shrank, tax revenue plummeted. The cost of the bank bailouts and stimulus packages further added to the deficit. In fact, an analysis by the Center on Budget and Policy Priorities indicates that the Bush tax cuts account for only about 25 percent of the deficit this year.



5. Continuing the tax cuts won't doom the long-term fiscal picture; entitlements are the real problem.



One theory holds that the country's long-term budget shortfall is "just" an entitlements problem, the result of rising costs associated with growing Social Security rolls and increased health-care spending (via Medicare and Medicaid). Republicans like this idea because it plays down tax increases as a potential solution. Democrats like it because it makes the recent health-care package seem like even more of a triumph.



But it just isn't true. The deficits we face over the next decade reflect a fundamental imbalance between spending and revenue, one that goes beyond entitlements. Based on projections by the CBO, Alan Auerbach of the University of California at Berkeley and myself, among others, even if the economy returns to full employment by 2014 and stays there for the rest of the decade, the continuation of current fiscal policies, including the Bush tax cuts, would lead to a national debt in the range of 90 percent of GDP by 2020. That's already the highest rate since just after World War II -- and Medicare, Medicaid and Social Security aren't expected to hit their steepest spending increases until after 2020. According to these same projections, the yearly deficit would rise to 6 to 7 percent of GDP by 2020. The Bush tax cuts would account for a significant chunk of this, considering that in each year they are in effect, the revenue lost because of them amounts to nearly 2 percent of GDP. Compounding the problem: By increasing the government's debt, the tax cuts have already led to higher interest payments on that debt. So even if all of the cuts expire on Dec. 31, we will still be paying for them for years to come.




William G. Gale is a senior fellow at the Brookings Institution and co-director of the Urban-Brookings Tax Policy Center.
http://www.taxpolicy....cfm?ID=1001423

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Old April 10th, 2011, 07:25 PM   #4
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Originally Posted by imaginethat View Post
It's moot, but let's have dueling tax cut articles!! And please, don't shoot the messenger....



http://www.taxpolicy....cfm?ID=1001423




I'm not sure that we are dueling. The article I posted was an article from 2007. It was about the results of the tax cut of 2003. Your article has to do with the extensions that were done in December of 2010.
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Old April 10th, 2011, 07:31 PM   #5
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Originally Posted by imaginethat View Post
It's moot, but let's have dueling tax cut articles!! And please, don't shoot the messenger....



http://www.taxpolicy....cfm?ID=1001423


From the article you posted:



4. The Bush tax cuts are the main cause of the budget deficit.



Although the cuts were large and drove revenue down sharply, they are not the main cause of the sizable deficit that exists today. In 2007, well after the tax cuts took effect, the budget deficit stood at 1.2 percent of GDP. By 2009, it had increased to 9.9 percent of the economy. The Bush tax cuts didn't change between 2007 and 2009, so clearly something else is to blame.




Oh my! It looks like the fine folks at Brookings agree with me. Now who'da thunk it? I will need to keep a watchful eye to see who the next person is to say that the Bush tax cuts caused the deficit. Wait! That wasn't you, was it?
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Old April 10th, 2011, 09:33 PM   #6
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Quote:
Originally Posted by LesGovt View Post
From the article you posted:



4. The Bush tax cuts are the main cause of the budget deficit.



Although the cuts were large and drove revenue down sharply, they are not the main cause of the sizable deficit that exists today. In 2007, well after the tax cuts took effect, the budget deficit stood at 1.2 percent of GDP. By 2009, it had increased to 9.9 percent of the economy. The Bush tax cuts didn't change between 2007 and 2009, so clearly something else is to blame.




Oh my! It looks like the fine folks at Brookings agree with me. Now who'da thunk it? I will need to keep a watchful eye to see who the next person is to say that the Bush tax cuts caused the deficit. Wait! That wasn't you, was it?


Yes, count me in.



The 2009 budget was Bush's, always conveniently ignored by knowledgeable righties, pulling the wool over the eyes of their less-knowledgeable compatriots. It was the inevitable outcome of Bush's artificial "good economy" propped up unsustainably by artificially low interest rates, flooding the nation with fiat money created by the Fed, a blind eye to illegal immigration, foreign interventionism funded with borrowed dollars, a "welfare plan" for the MIC, numerous tax loopholes provided for mega-multinational corporations, the continuation of offshore leasing and exploration bans - the first signed into law by Reagan, and which required reauthorization by every subsequent Congress, and the latter a result of Bush I's executive order merely requiring another executive order to rescind it ... neither happening until high gasoline prices in an election year, 2008, made it politically impossible not to do - and the insane neoconservative agenda in general.



Quote:
The main culprit was the recession -- and the responses it inspired. As the economy shrank, tax revenue plummeted. The cost of the bank bailouts and stimulus packages further added to the deficit. In fact, an analysis by the Center on Budget and Policy Priorities indicates that the Bush tax cuts account for only about 25 percent of the deficit this year.




The recession wasn't just some spontaneous, unfortunate happening like an uncharted asteroid striking the Earth by surprise. It resulted as a direct outcome of self-serving bipartisan politics, and especially, of eight years of Bush's "good economy" house of cards. Remember, he said no one could have seen this coming. Like hell, Ron Paul and a very few others had been predicting it all along, and as recently as 2007, almost everyone including his own party leaders scoffed at the prediction. Of course, one could say that's to be expected of liberals. But, one cannot say that's to be expected of conservatives. One can say, however, it is to be expected of neoconservatives.



In fact, as late as summer 2008 Bush said:



Quote:
WASHINGTON President Bush said Tuesday the nation's troubled financial system is "basically sound" and urged lawmakers to quickly enact legislation to prop up mortgage giants Fannie Mae and Freddie Mac.




http://www.foxnews.com/story/0,2933,...#ixzz1JBo8xsQY





Bush's statement is oxymoronic on its face, but it played into the fears of people, an established neocon tactic. And remember, the godfather of neoconservatism, Irving Kristol, described neocons as "liberals with an attitude." How true, how honest an appraisal.



Who'd a thunk it, indeed.
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Old April 11th, 2011, 02:51 AM   #7
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Originally Posted by imaginethat View Post
Yes, count me in.



The 2009 budget was Bush's, always conveniently ignored by knowledgeable righties, pulling the wool over the eyes of their less-knowledgeable compatriots. It was the inevitable outcome of Bush's artificial "good economy" propped up unsustainably by artificially low interest rates, flooding the nation with fiat money created by the Fed, a blind eye to illegal immigration, foreign interventionism funded with borrowed dollars, a "welfare plan" for the MIC, numerous tax loopholes provided for mega-multinational corporations, the continuation of offshore leasing and exploration bans - the first signed into law by Reagan, and which required reauthorization by every subsequent Congress, and the latter a result of Bush I's executive order merely requiring another executive order to rescind it ... neither happening until high gasoline prices in an election year, 2008, made it politically impossible not to do - and the insane neoconservative agenda in general.









The recession wasn't just some spontaneous, unfortunate happening like an uncharted asteroid striking the Earth by surprise. It resulted as a direct outcome of self-serving bipartisan politics, and especially, of eight years of Bush's "good economy" house of cards. Remember, he said no one could have seen this coming. Like hell, Ron Paul and a very few others had been predicting it all along, and as recently as 2007, almost everyone including his own party leaders scoffed at the prediction. Of course, one could say that's to be expected of liberals. But, one cannot say that's to be expected of conservatives. One can say, however, it is to be expected of neoconservatives.



In fact, as late as summer 2008 Bush said:







http://www.foxnews.c...l#ixzz1JBo8xsQY





Bush's statement is oxymoronic on its face, but it played into the fears of people, an established neocon tactic. And remember, the godfather of neoconservatism, Irving Kristol, described neocons as "liberals with an attitude." How true, how honest an appraisal.



Who'd a thunk it, indeed.


Congress, controltled by the Democrats established the 2009 BUDGET, Obama a Marxist...signed the budget into Law. Strange how both the media and the progressives attempt to RE-WRITE recent history, as if We the People are morons. Just like the recent debate over who was responsible for Shutting down the government most recently.....when in reality the budget which was being addressed could have and should have been signed into law Last Oct., 2010...if the PROGRESSIVES had actually wanted to have addressed the issue as they controlled both houses of congress and the white house, but Chose to kick the can down the road for political reaaons And now...attempting to balme Bush for the failure of the stimulus when in reality it was the conservatives in congress who were the only political creatures who VOTED against the deficit increasing legislation with the cries from Fancy Nancy being, "Pass it now!!!!! or WE are doomed....the conservatives are traitors to the nation, Children will strave, old people will go hugry, its an attack on womens rights...yada, yada, yada, the same broken record........." Meanwhile back on the Jet STREAM headed for California.......











http://www.foxbusiness.com/markets/2...obama-tax-law/
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Old April 11th, 2011, 04:28 AM   #8
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Congress, controltled by the Democrats established the 2009 BUDGET, Obama a Marxist...signed the budget into Law. Strange how both the media and the progressives attempt to RE-WRITE recent history, as if We the People are morons. Just like the recent debate over who was responsible for Shutting down the government most recently.....when in reality the budget which was being addressed could have and should have been signed into law Last Oct., 2010...if the PROGRESSIVES had actually wanted to have addressed the issue as they controlled both houses of congress and the white house, but Chose to kick the can down the road for political reaaons And now...attempting to balme Bush for the failure of the stimulus when in reality it was the conservatives in congress who were the only political creatures who VOTED against the deficit increasing legislation with the cries from Fancy Nancy being, "Pass it now!!!!! or WE are doomed....the conservatives are traitors to the nation, Children will strave, old people will go hugry, its an attack on womens rights...yada, yada, yada, the same broken record........." Meanwhile back on the Jet STREAM headed for California.......





http://www.foxbusiness.com/markets/2...obama-tax-law/




Oops! This budget was signed in March of 2009. President Obama took office in January of 2009.



On the other hand, I am no fan of President George W. Bush. But even that may not be fair, as I have only really like one President since I have been able to vote, which the voting age was 21 in those days.
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Old April 11th, 2011, 05:03 AM   #9
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Please, let us not forget that Bush and the republican majority in Congress neglected to include the costs of 2 wars in their budget for more than a few years, hmmm? And let us please, please not forget Medicare Part B shall we?



I refuse to allow any conservative to come here and spout nonsense about any fiscal responsibility on their part in recent history. And though conservatives want it to be otherwise, the facts remain and it is mainly from their actions over the last 10 years at the least, that the deficit has immensely increased. Enough with the bull, republicans do not honestly give a damn about spending, they destroy the economy and our budget surplus every time they take power. They only care about getting the dems and Obama out. Wall St. and corporate America are sitting very pretty right now. There are two economies in this country, and the middle class is taking it up the ass while the people who are doing well, are doing very, very well, and their taxes just keep getting lowered.
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Old April 11th, 2011, 06:23 AM   #10
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Quote:
Originally Posted by Ralph View Post
Congress, controltled by the Democrats established the 2009 BUDGET, Obama a Marxist...signed the budget into Law. Strange how both the media and the progressives attempt to RE-WRITE recent history, as if We the People are morons. Just like the recent debate over who was responsible for Shutting down the government most recently.....when in reality the budget which was being addressed could have and should have been signed into law Last Oct., 2010...if the PROGRESSIVES had actually wanted to have addressed the issue as they controlled both houses of congress and the white house, but Chose to kick the can down the road for political reaaons And now...attempting to balme Bush for the failure of the stimulus when in reality it was the conservatives in congress who were the only political creatures who VOTED against the deficit increasing legislation with the cries from Fancy Nancy being, "Pass it now!!!!! or WE are doomed....the conservatives are traitors to the nation, Children will strave, old people will go hugry, its an attack on womens rights...yada, yada, yada, the same broken record........." Meanwhile back on the Jet STREAM headed for California.......



http://www.foxbusiness.com/markets/2...obama-tax-law/


GW Bush proposed the 2009 federal budget on Feb. 4, 2008. It was an election year fairy tale from the outset, hiding the really bad news that was to come. Bush signed a "stopgap" measure in October 2008, effectively opting out of the final 2009 budget decision, passing the ball to the next president to break to the people just how bad things were.



But, I agree, Obama doubled-up the damage done by Bush. The present economic situation in the US is the result of a bipartisan effort,, much to the chagrin of both sides, predictably with both sides pointing fingers at the other, and with millions joining in this blame game.
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