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Title: So How Did the Bush Tax Cuts Work Out for the Economy?
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URL Source: http://www.tax.com/taxcom/taxblog.n ... alink/CHAS-89LPZ9?OpenDocument
Published: Sep 25, 2010
Author: David Cay Johnston
Post Date: 2010-09-25 13:13:21 by Skip Intro
Keywords: None
Views: 145916
Comments: 184
The 2008 income tax data are now in, so we can assess the fulfillment of the Republican promise that tax cuts would produce widespread prosperity by looking at all the years of the George W. Bush presidency. Just as they did in 2000, the Republicans are running this year on an economic platform of tax cuts, especially making the tax cuts permanent for the richest among us. So how did the tax cuts work out? My analysis of the new data, with all figures in 2008 dollars: Total income was $2.74 trillion less during the eight Bush years than if incomes had stayed at 2000 levels. That much additional income would have more than made up for the lack of demand that keeps us mired in the Great Recession. That would mean no need for a stimulus, although it would not have affected the last administration's interfering with market capitalism by bailing out irresponsible Wall Streeters instead of letting the market determine their fortunes. In only two years was total income up, but even when those years are combined they exceed the declines in only one of the other six years. Even if we limit the analysis by starting in 2003, when the dividend and capital gains tax cuts began, through the peak year of 2007, the result is still less income than at the 2000 level. Total income was down $951 billion during those four years. Average incomes fell. Average taxpayer income was down $3,512, or 5.7 percent, in 2008 compared with 2000, President Bush's own benchmark year for his promises of prosperity through tax cuts. Had incomes stayed at 2000 levels, the average taxpayer would have earned almost $21,000 more over those eight years. That's almost $50 per week. The changes in average and total incomes are detailed on the next page in Table 1, the first of four tables analyzing the whole data. Now that we have looked at the whole eight-year period, what does the new data show about 2008, the worst recession ear since the 1930s, show when compared to the peak year of 2007, when the average taxpayer made $63,096, which was 2.5 percent more than in 2000. In only two of the eight Bush years, 2006 and 2007, were average incomes higher than in 2000, but the gains were highly concentrated at the top. Of the total increase in income in 2007 over that in 2005, nearly 30 percent went to taxpayers who made $1 million or more. Now surely some will say that it is not fair to saddle George W. Bush and those who supported his tax cuts with the economic figures from 2001 and 2008. The first would be on the theory that President Clinton should be charged for that year (just as Bush should be charged with 2009, the first year of the Obama administration). The second is on less solid ground, but let's consider it for the sake of argument. Just measuring the second through seventh years we find that total income was still nearly $2 trillion lower than if 2000 level income continued. Stacking the deck in President George W. Bush's favor does not change the awful performance or even soften it much. The tax cuts cost $1.8 trillion in the first eight years, according to an analysis by the Tax Policy Center, whose reliability the last administration went out of its way to praise. Those cuts were heavily weighted toward the people candidate George W. Bush famously called "haves and the have-mores . . . some people call you the elite. I call you my base." In the two years since 2008, the cuts' total cost grew to $2.3 trillion, the Tax Policy Center estimated. One of every eight dollars of the tax cuts went to the 1 in 1,000 taxpayers in the top tenth of 1 percent, the annual threshold for which was in the $2 million range throughout the last administration. The only other large beneficiary was parents with children under 17 who make enough to pay income taxes, thanks to the $1,000-per-child tax credit Republicans started championing in the mid-1990s. Now let's look at wages, the source of most people's income. In 2008 the average taxpayer made $58,000. That was $5,100 less than in 2007, a decline of 8.1 percent. The number of taxpayers reporting any wages in 2008 was 1.26 million fewer than in 2007, a scary figure when you consider that most people do not expect to be out of work for an entire year and that the population grew by more than a percentage point. In August 42 percent of the unemployed -- 6.2 million people -- had been out of work for 27 weeks or more, the Bureau of Labor Statistics said. The average for all jobless workers was 33.6 weeks of unemployment, the equivalent of going from New Year's Day through August 23 without a paycheck. The number of taxpayers with incomes below $100,000 with any wage income fell in 2008 by 1.8 million. Because married couples file many tax returns, this means more than 2 million people who worked in 2007 earned no wages in 2008. Total wages in 2008 fell by nearly 4 percent, compared with a year earlier, for the 87 percent of Americans whose total income was less than $100,000. Since 2000, population grew more than wages. Those reporting negative incomes quadrupled from less than 600,000 in 2000 to nearly 2.5 million in 2008. Their losses worsened slightly from -$64,000 on average to -$66,000. The number of workers earning $500,000 or more in total income also fell, by just under 100,000 (or nearly 12 percent), but their average wage of $718,000 is still more than the average American earns in a decade at 2008 levels. The number of people reporting incomes of $200,000 or more but legally paying no federal income taxes skyrocketed in the second Bush term. A decade ago it was fewer than 1,500 taxpayers; in 2000 it was about 2,300. This high-income, tax-free group jumped to more than 11,000 in 2007 and then doubled in 2008 to more than 22,000. In 2008 nearly 1 in every 200 high-income taxpayers paid no federal income tax, up from about 1 in 1,500 in 1998. The share of high incomes that were untaxed increased more than sevenfold to one dollar of every $166. The Statistics of Income data on tax-free, high incomes severely understate economic reality because they exclude deferral accounts, including those of hedge fund managers with billion-dollar incomes who can legally report no current income and borrow against their untaxed gains to live tax free. Table 1. 2008 Average Incomes Fell Well Below 2000 Level The one bright spot in the SOI data at Table 1.4 was that the number of people making $100,000 to $200,000 grew significantly between 2007 and 2008. Their ranks increased by 393,465, or 3 percent, to more than 13.8 million taxpayers. This truly is good news, because most of the increase had to be people who worked their way up into six-figure incomes from 2007 to 2008. We know this because fewer than 160,000 taxpayers fell out of the $200,000-and-up income groups. Even if we assume that every one of them fell into the $100,000-$200,000 class, that still leaves 233,000 taxpayers who joined this income group. These 233,000 taxpayers must be people who increased their incomes enough to get them above the $100,000 line. And we know that they did it mostly through becoming more valuable workers, because this group relies on paychecks for more than 77 percent of its income. But despite that one sliver of good news about low six-figure incomes, the data show overwhelmingly that the Republican-sponsored tax cuts damaged our nation. Examining performance against the promises, what do we find? Overwhelming evidence that the tax cuts of 2001 and 2003 made us much worse off. Table 2. More Taxpayers, Less Revenue Ignore the cynics who say the Republican leaders on Capitol Hill, in Wasilla, and on the airwaves care only about the rich. I don't believe that. I think they are captive to economic theories few of them understand and that are simplistic in the extreme. I take them at their word, that they truly believe their policies will produce broad benefits for all, but accepting that does not diminish the fact that the policies these Republicans promote also produce massive tax savings for the superrich who finance their campaigns. The question to ask is whether their policies worked as promised. Have they even come close? Where is the prosperity -- and where was it in the Bush years, when massive increases in both military and discretionary spending provided a chronic stimulus to the economy? Table 3. 2007 to 2008: Fewer Jobs, Less Money (Mostly) The hard, empirical facts: The tax cuts did not spur investment. Job growth in the George W. Bush years was one-seventh that of the Clinton years. Nixon and Ford did better than Bush on jobs. Wages fell during the last administration. Average incomes fell. The number of Americans in poverty, as officially measured, hit a 16-year high last year of 43.6 million, though a National Academy of Sciences study says that the real poverty figure is closer to 51 million. Food banks are swamped. Foreclosure signs are everywhere. Americans and their governments are drowning in debt. And at the nexus of tax and healthcare, Republican ideas perpetuate a cruel and immoral system that rations healthcare -- while consuming every sixth dollar in the economy and making businesses, especially small businesses, less efficient and less profitable. This is economic madness. It is policy divorced from empirical evidence. It is insanity because the policies are illusory and delusional. The evidence is in, and it shows beyond a shadow of a reasonable doubt that the 2001 and 2003 tax cuts failed to achieve the promised goals. So why in the world is anyone giving any credence to the insistence by Republican leaders that tax cuts, more tax cuts, and deeper tax cuts are the remedy to our economic woes? Why are they not laughingstocks? It is one thing for Fox News to treat these policies as successful, but what of the rest of what Sarah Palin calls with some justification the "lamestream media," who treat these policies as worthy ideas? The Republican leadership is like the doctors who believed bleeding cured the sick. When physicians bled George Washington, he got worse, so they increased the treatment until they bled him to death. Our government, the basis of our freedoms, is spewing red ink, and the Republican solution is to spill ever more. Those who ignore evidence and pledge blind faith in policy based on ideological fantasy are little different from the clerics who made Galileo Galilei confess that the sun revolves around the earth. The Capitol Hill and media Republicans differ only in not threatening death to those who deny their dogma. How much more evidence do we need that we made terrible and costly mistakes in 2001 and 2003? Figure 1. High-Income Paying Zero Tax 1998-2008 The number of individual income tax returns showing adjusted gross income of $200,000 or more, but no income tax liability, has been rising rapidly in recent years. Table 4. 2008: Fewer Jobs, Lower Pay (With Exceptions in Bold)
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#1. To: Skip Intro (#0)
It let people who earned money keep more of the money they earned. No one but a communist would think that the government taking more money out of the economy is good. Are you a communist?
Do you think that is anything close to intelligent conversation? Got to fund those wars you guys support so much.
Got to fund those wars you guys support so much. He'll tell you he's not supportive of the wars but his behaviors tell a different story. He rarely, if ever, bans, threatens to ban or indulges in name calling with any of the war mongers here.
The question was reasonable considering the content of your posts.
Name some and post some examples of why you believe they are what you claim, whinigskag.
Another lefty. No surprise. http://davidcayjohnstonwatch.b logspot.com/ David Cay Johnston is a [former] New York Times' reporter on tax issues. He misrepresents his educational credentials -- which are virtually non-existent -- and is not a fair or neutral reporter. This is where we debunk his misleading and slanted reporting.
Do you smoke crack? You must if you think I ever supported any of these new world order wars.
Notice how Skip spends his time attacking Bush, who has been out of office for nearly two years now, and doesn't condem Obama who has bankrupted the nation????
Clinton and Cuomo are the true bandits who lit the fuse to this economic crisis we're now in. All in the name of getting more minorities in houses: http://libertysflame.com/cgi-bin/readart.cgi?ArtNum=12554
Yep. Just like war. And mininggold. But they're "Independents." NOT Dem-Rats :-)
I'm sorry, I lumped you in with all conservatives. Still doesn't mean your communist insult isn't retarded.
Commies/socialists/progressives are all about taking money out of the economy so they can control us. The less money the govt takes the more free we are. Money they take out of the economy makes us poorer. People who earn the money should be able to keep it.
Oh also. It is ok you lumped me in. It is hard to keep track of everyone's positions.
The less money the govt takes the more free we are. Money they take out of the economy makes us poorer. People who earn the money should be able to keep it. They money is taken when it is spent. Mainstream conservatives will fight tooth and nail on taxes, but have absolutely no problem with massive government spending. That money will be taken from our economy, now or later. Funding government is necessary, and the income tax is constitutional. The budget needs to be balanced, or at least more balanced. And tax cuts are not helping. Your argument might make some sense of the budget was balanced and democrats wanted to take more money for no reason. But taking money from the private sector to pay for government spending is in no way communist.
Govt revenue increased after the tax cuts. Probably more then 80 percent of what govt spends on is unconstitutional.
Govt revenue climes because the economy climes. It would have climbed more without the tax cuts. I concede there is a point at which tax cuts do increase revenue. But not at 40% of the top marginal tax rate.
40 percent is way to much. Taxes should be about 10 percent tops. That is more then enough money for them to waste. Also it is impossible to pay the debt back. It is a fraud. The kids of today don't owe it and should refuse to pay it. It isn't their debt. It is a bunch of elitest assholes debts. And dead peoples debts. Cancel it, it is bullshit. Congress doesn't have the authority to spend beyond their term and cripple future generations.
Bush borrowed money from the Communists to pay for tax cuts to the top 1%, and then rather than invest all that tax savings back into the USA the way Bush said they would to stimulate the economy, them rich guys created more jobs for the Communists in China. Who iis the Communist here?
Also it is impossible to pay the debt back. It is a fraud. The kids of today don't owe it and should refuse to pay it. It isn't their debt. It is a bunch of elitest assholes debts. And dead peoples debts. Cancel it, it is bullshit. Congress doesn't have the authority to spend beyond their term and cripple future generations. I'm not saying 40% is a fair rate, I'm just saying a 40% tax rate is high enough to start hurting tax revenue. Unfortunately Congress does have the authority to create debt. Ignoring that debt isn't a reasonable option.
Also the Capital Gains tax should be exactly what the same tax on earned income is. Why is it okay to tax someone for working at a higher rate for someone doing nothing.
You should look up Arther Laffer.
The current members of the "You're a worthless sack of shit" list includes WAR, calcon, e_type_jack-off, mad-dog (more like rabidly stupid), ibluafartsky and the fascism-shill no gnu taxes (aka 400 bucks, happyfunball, 50yardline, etc, etc.) If you're on the list, don't bother writing, 'cause you're a waste of flesh.
Right. His current plan for restoring economic health is to suspend ALL federal tax collection for a year and a half.
I agree!
I would argue that they are elected for two years and they acted unconstitutionally. I would print blue money to pay foreigners back. That money would be honored for purchases of American goods and services only if it was redeemed by the entity that was originally given the money. In other words they would be like a coupon redeemable in America only by whoever it was that got the blue money. If they don't like it screw them. Paying back imaginary debt is worse then defaulting on it. America first second thrid fourth fifth sixth seventh eighth ninth tenth eleventh and then maybe we will consider another countries interests.
I agree! How about this idea. Get rid of all income tax. Only tax corporations. They say corporations don't pay taxes anyway. Then they can shift the burden back to the people.
You're the biggest pussy on the internet.
them rich guys Who iis the Communist here? Get your nose out of the bottle lucysmom.
Bush borrowed money from Cuba and North Korea??? They are the only communist countries left. The Castro brothers finally announced that their policies don't work so they are laying off 500,000 government bureaucrats and implementing reforms to entice entrepreneurs (BUSINESS PEOPLE). I wish U.S. politicians had the cajones to make 500,000 bureaucrats available to the market. That would truely be magnificent. But of course, you were talking about China. I've been to China a few times. China is MUCH more capitalistic than than U.S.
You should look up Arther Laffer. The laffer curve is somewhat bullshit. There is a point at which too high of a tax rate actually reduces government spending. However 35% top marginal is on the low side of the laffer curve. The laffer curve also has no empirical support, which makes it meaningless to use. It's a wild guess that somewhat approximates reality.
I would argue that they are elected for two years and they acted unconstitutionally. I would print blue money to pay foreigners back. That money would be honored for purchases of American goods and services only if it was redeemed by the entity that was originally given the money. In other words they would be like a coupon redeemable in America only by whoever it was that got the blue money. If they don't like it screw them. Paying back imaginary debt is worse then defaulting on it. America first second thrid fourth fifth sixth seventh eighth ninth tenth eleventh and then maybe we will consider another countries interests. Those foreigners bought those bonds, it isn't their fault our government is a spending whore. Our unimpeachable record on paying back debts is a massive national asset. It's why the US isn't Greece right now.
Oh - well - its ok then.
No, it's no okay but Obama is borrowing much more money than Bush. Bush was horrible. Obama is worse. They both suck. That's the bottom line.
Actually I think Bush is the worser of the two - he chose to borrow rather than pay down the debt - Obama really didn't have a choice.
LOL So the $800 BILLION "stimulus" was forced on Obama from above? NO. He chose to do this to PAY OFF political dues to his government union buddies who helped elect him. Everyone knows this. This is why the Democrats will rightfully go down in flames in November in spite of the GOP's ineptitude. God help us all.
Laffer is an idiot. He was adamant in 2006 that the economy wasn't in trouble and Schiff schooled him hard. Laffer lost all credibility with me when he missed the collapse.
Clinton and Cuomo are the true bandits who lit the fuse to this economic crisis we're now in. All in the name of getting more minorities in houses: http://libertysflame.com/cgi-bin/readart.cgi?ArtNum=12554
Man are you ignorant of basic economics. Obama's "Stimulus" is far worse than anything Bush did.
Clinton and Cuomo are the true bandits who lit the fuse to this economic crisis we're now in. All in the name of getting more minorities in houses: http://libertysflame.com/cgi-bin/readart.cgi?ArtNum=12554
Are you drunk or just plain stupid?
Worse than the war Bush lied us into. Linda Bilmes, senior lecturer in public policy at the Harvard Kennedy School and co-author of the Three Trillion Dollar War, argues that official government estimates of the war’s costs are too low because they do not take into account costs such as higher combat pay and recruiting costs, Social Security disability payments for veterans who can no longer work, the cost of restoring the military to its pre-war strength (replacing the bullets and bombs that have been used). She and Joseph Stiglitz, a Nobel-prize winning economist at Columbia University, argue that the "true" cost of Iraq will be several trillion dollars. Worse, I suppose than the lives lost or human beings disabled for life. We also should note that the $814 billion cost for the stimulus includes $70 billion to fix a problem with the Alternative Minimum Tax, which is designed to target the wealthiest taxpayers but is gradually affecting more people in the middle class. Yep, that's pretty bad.
Considering it earned him the Nobel Prize- back when it *meant* something- I think you'll find that a hard sell. Of course, it is also founded on common sense. Arguing against the Laffer curve, doesn't touch the cred of Laffer, but it certainly reflects on you.
The current members of the "You're a worthless sack of shit" list includes WAR, calcon, e_type_jack-off, mad-dog (more like rabidly stupid), ibluafartsky and the fascism-shill no gnu taxes (aka 400 bucks, happyfunball, 50yardline, etc, etc.) If you're on the list, don't bother writing, 'cause you're a waste of flesh.
He was adamant in 2006 that the economy wasn't in trouble and Schiff schooled him hard. Laffer lost all credibility with me when he missed the collapse. He's an academic- best suited to sitting in a University and analyzing theoretical models. I agree he was pretty-well smacked down by Schiff. But that does not change the validity of the Laffer Curve, which has stood the test of time, and is a foundational piece of both modern and Austrian economics (though I don't recall the latter qualifying it with such a curve).
The current members of the "You're a worthless sack of shit" list includes WAR, calcon, e_type_jack-off, mad-dog (more like rabidly stupid), ibluafartsky and the fascism-shill no gnu taxes (aka 400 bucks, happyfunball, 50yardline, etc, etc.) If you're on the list, don't bother writing, 'cause you're a waste of flesh.
That's a very good idea. STARVE 'em...! Please provide an empirical argument to counter his position...
The current members of the "You're a worthless sack of shit" list includes WAR, calcon, e_type_jack-off, mad-dog (more like rabidly stupid), ibluafartsky and the fascism-shill no gnu taxes (aka 400 bucks, happyfunball, 50yardline, etc, etc.) If you're on the list, don't bother writing, 'cause you're a waste of flesh.
Comments (41 - 184) not displayed.
Top • Page Up • Full Thread • Page Down • Bottom/Latest
#2. To: A K A Stone (#1)
It let people who earned money keep more of the money they earned. No one but a communist would think that the government taking more money out of the economy is good. Are you a communist?
#3. To: Rhino, A K A Stone (#2)
Do you think that is anything close to intelligent conversation?
#4. To: Rhino, A K A Stone (#2)
Do you think that is anything close to intelligent conversation?
#5. To: mininggold (#3)
the war mongers here.
#6. To: Skip Intro (#0)
Author: David Cay Johnston
#7. To: Rhino (#2)
#8. To: A K A Stone (#1)
It let people who earned money keep more of the money they earned. No one but a communist would think that the government taking more money out of the economy is good. Are you a communist?
#9. To: Nebuchadnezzar, Skid Mark, dwarf (#8)
Notice how Skip spends his time attacking Bush, who has been out of office for nearly two years now, and doesn't condem Obama who has bankrupted the nation????
#10. To: A K A Stone (#7)
Do you smoke crack? You must if you think I ever supported any of these new world order wars.
#11. To: Rhino (#10)
#12. To: Rhino (#10)
#13. To: A K A Stone (#11)
(Edited)
Commies/socialists/progressives are all about taking money out of the economy so they can control us.
#14. To: Rhino (#13)
#15. To: A K A Stone (#14)
Govt revenue increased after the tax cuts. Probably more then 80 percent of what govt spends on is unconstitutional.
#16. To: Rhino (#15)
#17. To: A K A Stone, Skip Intro (#1)
No one but a communist would think that the government taking more money out of the economy is good. Are you a communist?
#18. To: A K A Stone (#16)
40 percent is way to much. Taxes should be about 10 percent tops. That is more then enough money for them to waste.
Also it is impossible to pay the debt back. It is a fraud. The kids of today don't owe it and should refuse to pay it. It isn't their debt. It is a bunch of elitest assholes debts. And dead peoples debts. Cancel it, it is bullshit. Congress doesn't have the authority to spend beyond their term and cripple future generations.
#19. To: All (#18)
#20. To: Rhino (#15)
I concede there is a point at which tax cuts do increase revenue.
Mad dog gets
"calibrated..."
#21. To: Capitalist Eric (#20)
You should look up Arther Laffer.
#22. To: Rhino (#19)
Also the Capital Gains tax should be exactly what the same tax on earned income is.
#23. To: Rhino (#18)
Unfortunately Congress does have the authority to create debt. Ignoring that debt isn't a reasonable option.
#24. To: lucysmom (#22)
Also the Capital Gains tax should be exactly what the same tax on earned income is.
#25. To: Capitalist Eric (#20)
The current members of the "You're a worthless sack of shit" list
#26. To: lucysmom (#17)
Bush borrowed money from the Communists
#27. To: lucysmom (#17)
(Edited)
Bush borrowed money from the Communists
democracy will cease to exist when you take away from those who are willing to work and give to those who would not -- Thomas Jefferson
#28. To: Capitalist Eric (#20)
I concede there is a point at which tax cuts do increase revenue.
#29. To: A K A Stone (#23)
#30. To: jwpegler (#27)
China is MUCH more capitalistic than than U.S.
#31. To: lucysmom (#30)
(Edited)
Oh - well - its ok then.
democracy will cease to exist when you take away from those who are willing to work and give to those who would not -- Thomas Jefferson
#32. To: jwpegler (#31)
Bush was horrible. Obama is worse. They both suck.
#33. To: lucysmom (#32)
(Edited)
Obama really didn't have a choice.
democracy will cease to exist when you take away from those who are willing to work and give to those who would not -- Thomas Jefferson
#34. To: Capitalist Eric (#20)
#35. To: lucysmom (#32)
Actually I think Bush is the worser of the two - he chose to borrow rather than pay down the debt - Obama really didn't have a choice.
#36. To: lucysmom (#32)
Bush is the worser
#37. To: Nebuchadnezzar (#35)
Obama's "Stimulus" is far worse than anything Bush did.
#38. To: Rhino (#28)
The laffer curve is somewhat bullshit.
Mad dog gets
"calibrated..."
#39. To: Nebuchadnezzar (#34)
Laffer is an idiot.
Mad dog gets
"calibrated..."
#40. To: lucysmom (#21)
His current plan for restoring economic health is to suspend ALL federal tax collection for a year and a half.
Mad dog gets
"calibrated..."
.
.
.
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