George W. Bush's largest tax reductions, in 2001 and 2003, helped high earners but provided even more help to people living off their accumulated wealth. While the top tax rate on income for work dropped from 39.6 percent to 35 percent, the top
rate on dividends went from 39.6 percent (taxed as ordinary income) to 15 percent, and the estate tax was completely eliminated.
Barack Obama rolled back some of these cuts, but many remained. Before George W.
Bush was president, the estate tax applied to assets in excess of $2 million per couple, at a rate of 55 percent. By 2014, it applied only to assets in excess of $10 million per couple, at a 40 percent rate.
Meanwhile, the tax rate paid by America's wealthy on their capital gains--the major source of income for the non-working rich--dropped from 33 percent in the late 1980s to 23.8 percent.
Opposed supply-side argument for consumption-based flat tax
In the 2000 campaign and in his 1st term, Bush bypassed the advice of many supply-siders who were arguing for a consumption-based flat tax. He pressed instead for moderate cuts in tax rates, generous expansion of the pro-family child tax credit,
and (in such cases as the death tax and double taxation of corporate dividends) outright abolition of some federal taxes.
In the 1st half of 2001, he fought hard for a much larger tax-cut package than was expected of a president who had recently lost the popular vote, and he got much of it--but at the price of an overly long "phasing in"
of the rate reductions, a delay that supply-siders believe postpones a good deal of the economic advance the tax cuts are designed to achieve.
1989: temporary sales tax increase for new Rangers stadium
Running the Texas Rangers [baseball team] sharpened my management skills. I spent time on the major financial and strategic issues, and left the baseball decisions to baseball men. When people did not perform, we made changes.
When I took over, the
Rangers had finished with a losing record seven of the previous nine years. The club had posted a winning record four of our first five seasons.
I realized the best way to increase the long-term value of the franchise was to upgrade our stadium. The Rangers were a major league team playing in a minor league ballpark. We designed a public-private financing system to
fund the construction of a new stadium. I had no objection to a temporary sales tax increase to pay for the park, so long as local citizens had a chance to vote on it. They passed it by a margin of nearly two to one.
In 2001, richest 1% paid $301B; by 2006 they paid $408B
How should Republican candidates handle the tax issue? By arming themselves with one basic fact: tax cuts--not increases--generate additional revenue.
By squelching economic activity & reducing consumer buying power, higher taxes hurt the economy, dry
up commerce, and reduce tax revenues. Tax cuts do just the opposite: By adding to buying power, they add revenue. This isn't just theory. It's what has happened every time.
When George W. Bush cut taxes for the wealthiest Americans, he cut their tax
rates--but the amount they paid rose sharply. Yes, that's right: Lower rates generated higher revenues. In 2001, before Bush's tax cuts took effect, the richest 1% of the country paid $301 billion a year in total taxes. By 2006, they were paying $408
billion a year. And the share of total tax payments by the richest tenth of the country rose from 65% before Bush's tax cuts to 71% in 2006.
So remember that mantra: Lower taxes produce higher revenue. It's one of the most powerful messages we have.
One likely candidate for an increase is the so-called Death Tax--the inheritance tax that has fallen to zero in 2010 due to the schedule of Bush tax cuts passed in 2001. In his 2011 budget, Obama proposes to hike the tax back up to 45% in 2011.
problem with the Death Tax isn't how it affects families that own the wealth so much as how it impacts those who earn money to accumulate it. The tax itself is paid by only the top 2% of families. The Death Tax gives these wealthy Americans an incentive
to hold their assets in cash. If a person dies with $10 million, and his estate has to pay the government 45% of the amount over $3.5 million, his heirs have to come up with approximately $3 million in a matter of months. If the funds of the deceased are
in cash or a liquid asset, that's easy.
So the Death Tax creates an incentive NOT to invest money in one's business, but to keep it in things like houses and yachts and luxury goods--or cash and gold and bonds--that are easier to liquidate.
FactCheck: Expiring tax cuts typically cost $828, not $1,800
The president, using an accurate but misleading figure, exaggerated the effect on the typical taxpayer of allowing his tax cuts to expire. Bush said, “Some in Washington argue that letting tax relief expire is not a tax increase. Try explaining that to
116 million American taxpayers who would see their taxes rise by an average of $1,800.”
It is true that taxes would go up compared with what people pay now should all the tax cuts expire--we calculate an average increase of $1,713. But the
AVERAGE increase would not be TYPICAL. The increase would be far smaller, $828, for “typical” middle-earners (income between $27,000 and $48,000 a year). And of course, the increase would be lower still for those with lower incomes. For more than
80% of taxpayers, the increase would be well below Bush’s “average” figure. But for the top 1% earners (with incomes over $435,000) the tax increase would be $64,154. That’s what pulls up the average to well above what ordinary taxpayers would experience
The tax relief you passed has left $880 billion in the hands of the American people. And they have used it to help produce more than four years of uninterrupted economic growth. Yet the tax relief is set to expire in the next few years. If we do
nothing, American families will face a massive tax increase they do not expect and will not welcome. Because America needs more than a temporary expansion, we need more than temporary tax relief. I urge the Congress to make the tax cuts permanent.
Source: 2006 State of the Union Address
, Jan 31, 2006
Re-examine the tax code from top to bottom
Year after year, Americans are burdened by an archaic, incoherent federal tax code. I’ve appointed a bipartisan panel to examine the tax code from top to bottom.
And when the recommendations are delivered, you and I will work together to give this nation a tax code that is pro-growth, easy to understand and fair to all.
Source: 2005 State of the Union Speech
, Feb 2, 2005
FactCheck: Kerry voted to increase taxes 39 times, not 98
FACT CHECK: Bush again said Kerry “voted to increase taxes 98 times.” But that total includes up to 16 votes on a single tax bill, and 43 votes on budget measures that set targets but don’t actually legislate tax increases.
Source: Analysis of Third Bush-Kerry debate (FactCheck 2004)
, Oct 14, 2004
Now the tax code is fairer after the tax cut
Most of the tax cuts went to low- and middle-income Americans. Now the tax code is fairer. 20% of the upper-income people pay about 80% of the taxes in America today because of how we structured the tax cuts. If you have a child, you got tax relief. If
you’re married, you got tax relief. If you pay any tax at all, you got tax relief. All of which was opposed by Kerry. The tax relief was important to spur consumption and investment to get us out of this recession. People need to remember: Six months
prior to my arrival, the stock market started to go down. It was one of the largest declines in our history. Then we had a recession and we got attacked, which cost us 1 million jobs. We passed tax relief. And now this economy is growing. We added 1.9
million new jobs over the last 13 months. The way to make sure our economy grows is not to raise taxes on small-business owners. It’s not to increase the scope of the federal government. It’s to make sure we have fiscal sanity and keep taxes low.
BUSH: I believe the role of government is to stand side by side with our citizens to help them realize their dreams, not tell citizens how to live their lives. Kerry talks about fiscal sanity. His record in the United States Senate does not match his
rhetoric. He voted to increase taxes 98 times and to bust the budget 277 times.
KERRY: I have supported or voted for tax cuts over 600 times. I broke with my party in order to balance the budget, and Ronald Reagan signed into law the tax cut that
we voted for. I voted for IRA tax cuts. I voted for small-business tax cuts.
BUSH: Kerry voted to violate the budget cap 277 times. You know, there’s a main stream in American politics and you sit right on the far left bank.
As a matter of fact, your record is such that Ted Kennedy, your colleague, is the conservative senator from Massachusetts.
Will lead a bipartisan effort to simplify the tax code
Another drag on our economy is the current tax code, which is a complicated mess filled with special interest loopholes, saddling our people with more than six billion hours of paperwork and headache every year.
The American people deserve and our economic future demands a simpler, fairer, pro-growth system. In a new term, I will lead a bipartisan effort to reform and simplify the federal tax code.
The tax reductions you [Congress] passed are set to expire. Unless you act, the unfair tax on marriage will go back up. Unless you act, millions of families will be charged $300 more in federal taxes for every child.
Unless you act, the death tax will eventually come back to life. Unless you act, Americans face a tax increase. What the Congress has given, the Congress should not take away. For the sake of job growth, the tax cuts you passed should be permanent.
Source: 2004 State of the Union address to joint session of Congress
, Jan 20, 2004
Everyone benefits from dividend tax reform
Everyone who invests in the stock market and receives dividend income-especially seniors-will benefit from dividend tax relief. Half of all dividend income goes to America’s seniors, who often rely on those checks for a steady source of retirement income
Source: 2004 Presidential website, georgewbush.com
, Aug 29, 2003
Reduction in dividend taxes benefits 35 million people
Roughly 35 million American households receive dividend income that is taxable and will directly benefit under the President’s plan. Almost half of all savings from the dividend tax cut would go to taxpayers 65 and older.
The new law will reduce dividend and capital gains taxes for millions of stockholders - pumping billions into the economy this year alone. Twenty-six million taxpayers with income from dividends and capital gains will receive an average tax cut of $798.
Source: 2004 Presidential website, georgewbush.com
, Aug 29, 2003
Make the end of the death tax permanent
In 2001, Bush fulfilled his promise to reduce the tax burden on the American people. This tax relief gave the economy a boost at just the right time-ensuring that the recession was one of the shortest and shallowest in modern American history.
These tax cuts worked, and the President will continue to press Congress to make the cuts-including the end of the death tax-permanent.
Source: 2004 Presidential website, georgewbush.com
, Aug 29, 2003
People should not pay more in taxes than they do for food
Today in America, people pay more in federal, state and local taxes than they do in food and clothing and housing..
This isn’t right, folks. We ought to send some of your money back to the people who pay the bills.
Source: Speech in Michigan
, Nov 4, 2000
Be fair and eliminate death taxes for everyone
GORE [to Bush]: Under the plan that I’ve proposed, 80 percent of all family farms will be completely exempt from the estate tax, and the vast majority of all family businesses would be
completely exempt, and all of the others would have sharply reduced. The problem with completely eliminating it goes back to the wealthiest 1 percent. The amount of money that has to be raised in taxes from middle class families would be a heavy burden.
BUSH: Eliminate the death tax completely because people shouldn’t be taxed twice on their assets. It’s either unfair for some or unfair for all. I think if you’ve got tax relief, everybody benefits.
Don’t eliminate gas tax; ask OPEC to increase supply
On gas prices: Bush said, “The long-term solution is an energy policy. The short-term solution is the price of crude on the market. The administration ought to convince OPEC to increase the supply of crude oil.”
Gore said, “I’m pleased that
Saudi Arabia is proposing to increase production. I call on the big oil companies to let that pass through in the form of price reductions at the gasoline filling stations. What we need is not a trickle of relief, we need significant reduction.”
Source: AP article in Washington Post on 2000 election
, Jul 3, 2000
Use the marketplace to encourage people to save and invest
Bush served as moderator on a panel of community leaders discussing ways to use the marketplace to encourage people to save and invest their money. A few weeks ago, he proposed $1 billion in tax credits to promote 1.3 million new “individual
development accounts.” Under that plan, a person who saved as much as $300 could be eligible for a dollar-for-dollar match from a bank. The bank could take a federal tax credit for as much as half the amount contributed.
Source: Terry M. Neal, Washington Post, page 14 on 2000 election
, Apr 26, 2000
New Prosperity Initiative: 6 million tax-free families
To Reward Work [as part of the New Prosperity Initiative], Governor Bush’s tax reform plan will:
Give the biggest percentage cuts to the lowest income earners, making the tax code more progressive.
Help low-income families keep more of their
earnings by creating a new, lower bottom rate of just 10%, and doubling the per-child credit to $1,000.
Take 6 million families - one in five taxpaying families - off the income tax rolls.
Q: [to Bush & Forbes]: Forbes’ TV ad says that in 1994 you signed a pledge to not support sales tax or business tax increases, and in 1997 you broke the pledge.
BUSH: I led my state, in 1997, to the largest tax cut in Texas history. I laid out a plan
that cut $1 billion of property taxes.. I am a tax-cutting person.
FORBES: There was a lot of hedging about this pledge. The pledge was made in 1994. I have a copy of it here, promising not to raise the sales tax or to propose any kind of income tax.
When he proposed this bill in 1997 it did have provisions in there for tax increases including increasing a sales tax. Pledges should not be lightly made and a pledge is a promise. Bush’s own staff admits that he broke the pledge. In 1998, I supported
you & I would have voted for you. But you did break that pledge.
BUSH: [People] need to look at the results. That’s what’s important. The results are people from all walks of life received a substantial tax cut under me as the governor of Texas.
Proposed $8 billion - 10% of the non-Social Security surplus - for tax incentives to encourage people to contribute to charities and community groups that offer social services, from prison and drug rehabilitation to job training, mentoring and adult
education programs. It is not enough, Bush said, for politicians to merely advocate tax cuts without proposing solutions for social problems. Bush said that governments role is to promote community solutions.
Source: Terry Neal, The Washington Post on 2000 election
, Jul 23, 1999
Read my tax pledge: No new taxes
Bush signed a tax pledge that says, “If elected president, I will oppose and veto any increase in individual or coporate marginal income tax rates or individual or corporate income tax hikes.. I will also oppose any further reduction or elimination of
of income tax deductions and credits, unless offset dollar for dollar by reducing tax rates.”
Source: Quoted on CNBC’s “Hardball with Chris Matthews”
, Jun 9, 1999
Simplify tax code to stimulate economic growth
Bush said he would present a plan for a flatter and simpler tax code. He said the principal goal of his tax plan is to stimulate economic growth and productivity. A second goal is to return government surpluses to taxpayers, once ‘basic needs’ of society
have been met.
Source: Dan Balz, The Washington Post on 2000 election
, Apr 25, 1999
George W. Bush on Income Tax Cut
Did not prioritize on making Bush tax cuts permanent
Coming out of his reelection, Bush had a clear, forward-looking mandate on the economy to make his 2001 and 2003 tax cuts permanent (this was the economic issue where he had most starkly differed from Kerry during the campaign).
In 2005, it would have been virtually impossible for a new Congress with 55 Republicans in the Senate and 232 Republicans in the House to deny such a request.
Instead, Bush decided not to make the permanence of his tax cuts a legislative priority. Nominally, he asked Congress to do this.
In reality, he put all his domestic emphasis on Social Security reform.
2001: Enough is enough; American people deserve tax relief
Bush critics believed that his tax cuts were too costly, favored the rich, and hurt the economy. But these criticisms are not based on the facts.
In 2001, the economy was lurching into recession and the federal government was taking a bigger share of
the US economy in taxes than in any year since 1944. Adjusting for inflation, Washington collected twice as much income tax revenue in 2001 as it did in 1981. Bush summed up his view this way: "Enough is enough. The American people deserve tax relief."
In response, Congress approved a tax relief package of $1.3 trillion.
Bush's support for tax cuts was grounded in three premises. First, he understood that money collected from the people belonged to them, not the government. Second,
Bush knew that while government cannot create wealth, it can affect the environment in which entrepreneurs flourish and jobs are created. Third, Bush saw that tax cuts would create new jobs and ease the financial burdens of average Americans.
OpEd: Bush tax cuts led to decreased investment & savings
Fiscal conservatives have faulted the Bush administration for adding to federal deficits. Bush's deficit is built on gratuitous tax cuts for the very rich and a needless war. If the same deficit were the consequence of a fairer tax code and increased
social investment, the current net deficit would be entirely virtuous. The Bush tax cuts were supposed to lead to increased private investment, higher savings rates, and improved economic growth. Their effect was precisely the opposite.
Source: Obama`s Challenge, by Robert Kuttner, p. 30
, Aug 25, 2008
OpEd: Middle class get $54 from tax cut; top 1% get $191
Under the tax cuts pushed through Congress since 2000, for every dollar in reductions for a middle-class family, the top 1% of households will receive $54, and those with $1 million of more in income will benefit by $191!
During the first 3 years, the number of Americans living in poverty increased by 3.5 million, while the income for the 400 wealthiest Americans jumped by 10% just in the year 2002.
Another indication of the growing division between rich and poor in recent years is that the salaries of corporate chief executive officers have gone from 40 times to 400 times the average worker's pay.
Even though there was strong growth in corporate profits, wages for the average worker fell in 2004, after adjusting for inflation--the 1st such drop in many years.
Taxpayer dollars must be spent wisely or not at all
We must be good stewards of this economy and renew the great institutions on which millions of our fellow citizens rely. America’s economy is the fastest growing of any major industrialized nation. In the past four years we’ve provided tax relief to
every person who pays income taxes, overcome a recession, opened up new markets abroad, prosecuted corporate criminals, raised homeownership to its highest level in history, and in the last year alone the United States has added 2.3 million new jobs.
By making our economy more flexible, more innovative, and more competitive, we will keep America the economic leader of the world. America’s prosperity requires restraining the spending appetite of the federal government.
I welcome the bipartisan enthusiasm for spending discipline.
The principle here is clear: Taxpayer dollars must be spent wisely or not at all.
BUSH: Most of the tax cuts went to low- and middle-income Americans. And now the tax code is more fair.
FACT CHECK: Bush could hardly have been farther off base when he said most of his tax cuts “went to low- and middle-income Americans.” That’s just not true. In fact, the nonpartisan
Tax Policy Center recently calculated that most of the tax cuts-53% to be exact-went to the highest-earning 10% of US individuals and families. Those most affluent Americans got an average tax cut of $7,661.
And as for the “low- and middle-income Americans” Bush mentioned-the bottom 60% of individuals and families got only 13.7% of the tax cuts, a far cry from “most” of the cuts as claimed by Bush.
BUSH: 20% of the upper-income people pay about 80% of the taxes in America today because of how we structured the tax cuts.
The President came closer to the mark, but still got it wrong, when he said that the top 20% of earners pay “about 80% of the taxes in America today.”
That’s incorrect. In fact, as we reported only that morning, the Congressional Budget Office calculates that the top 20% now pay 63.5% of the total federal tax burden, which includes income taxes, payroll taxes and other federal levies.
It’s true that the top 20% pays nearly 81% of all federal income taxes, but the president spoke more expansively of “taxes in America,” not just income taxes.
Q: How will either one of you cut the deficit by a half in four years?
BUSH: Well look at the budget. One is to make sure Congress doesn’t overspend. But let me talk back about where we’ve been. The stock market was declining six months prior to my
arrival. It was the largest stock market correction - one of the largest in history, which foretold a recession. Because we cut taxes on everybody - remember, we ran up the child credit by a thousand, we reduced the marriage penalty, we created the
10 percent bracket - everybody who pays taxes got relief.
KERRY: Most of the 2001 tax cut went to the wealthiest people in the country. Bush came and asked for a tax cut.
We wanted a tax cut to kick the economy into gear. You know what he presented us with? A $25 billion give-away to the biggest corporations in America, including a $254 million refund check to Enron.
BUSH: I’m optimistic about America because I believe in the people of America.
AD ANNOUNCER: After recession, 9-11 and war, now our economy has been growing for ten straight months.
The largest tax relief in history.
1.4 million jobs added
Inflation, interest and mortgage rates low.
John Kerry’s response? He’s talking about the Great Depression.
One thing’s sure... Pessimism never created a job.
ANALYSIS: This Bush ad on cable networks
makes a questionable claim when it lists “the largest tax relief in history” amid Bush’s accomplishments. Bush’s cuts are indeed historically big. But whether they are bigger than Ronald Reagan’s depends on any number of assumptions. Reagan’s looks
larger by several measures.
The campaign has taken a positive turn: with this ad, Bush paints himself as a bigger optimist than Kerry. He’s responding to a June 1 Kerry ad in which Kerry says, “We’re a country of optimists; we’re the can-do people.”
The tax relief you [Congress] passed is working. And because you acted to stimulate our economy with tax relief, this economy is strong and growing stronger. You have doubled the child tax credit from $500 to $1,000, reduced the marriage penalty,
begun to phase out the death tax, reduced taxes on capital gains and stock dividends, cut taxes on small businesses, and you have lowered taxes for every American who pays income taxes.
Americans took those dollars and put them to work,
driving this economy forward. The pace of economic growth in the third quarter of 2003 was the fastest in nearly 20 years: new home construction, the highest in almost 20 years; homeownership rates, the highest ever. Manufacturing activity is increasing,
inflation is low, interest rates are low, exports are growing, productivity is high, and jobs are on the rise.
These numbers confirm that the American people are using their money far better than government would have, and you were right to return it.
Fact Check: Tax relief fueled spending, but not job growth
FACTCHECK on the Economy: The President said the economy is growing and producing jobs, but failed to mention that the growth is so far insufficient to make up for what’s been lost since he took office.
BUSH: We have come through recession,
and terrorist attack, and corporate scandals, and the uncertainties of war. And because you acted to stimulate our economy with tax relief, this economy is strong, and growing stronger.... And jobs are on the rise.
FACTCHECK: It is true that the
economy grew last quarter at a yearly rate of 8.2%. And private economists are generally agreed that tax cuts helped propel the consumer spending that fueled the growth, which continues. Also true is that the economy has gained 278,000 jobs since July,
when the job slump bottomed out. But what the President left unsaid is that in the most recent month the job gain was almost nonexistent-only 1,000-and that as of December total employment was still 2.3 million below where it stood when Bush took office.
The Jobs and Growth Act of 2003 will be speeding up the 2001 tax cuts to increase the pace of economic recovery and job creation. The President recognized that the time to deliver this relief is now -
when it can do the most good for families, businesses, and the economy - not years from now. Under the jobs and growth act, 91 million taxpayers will receive, on average, a tax cut of $1,126 in 2003.
Source: 2004 Presidential website, georgewbush.com
, Aug 29, 2003
Tax relief allows saving & spending more of your own money
The President’s tax relief will allow the American people to keep more of their own money to spend,
save and invest; encourage individuals and businesses to make new investments that will lead to economic growth and job creation; and deliver critical help to unemployed citizens.
Source: 2004 Presidential website, georgewbush.com
, Aug 29, 2003
Deliver substantial tax relief to 91 million Americans
The Jobs and Growth Tax Relief Reconciliation Act of 2003 will deliver substantial tax relief to 91 million American taxpayers.
Middle-income families will receive additional relief from accelerated reduction of the marriage penalty, a faster increase in the child tax credit, and immediate implementation of the new, lower 10 percent tax bracket.
Source: 2004 Presidential website, georgewbush.com
, Aug 29, 2003
Married with children -- taxes drop 96%
[The President’s tax plan] moves several million working Americans into the lower 10-percent tax bracket immediately, allowing them to keep more of their income.
For example, a married couple with two children and income of $40,000 will see their taxes decline under the President’s jobs and growth law by $1,133 (from $1,178 to $45) in 2003, a decline of 96 percent.
Source: 2004 Presidential website, georgewbush.com
, Aug 29, 2003
Not too big, not too small, tax cut was just the right size
[The 2001 State of the Union speech addressed] the biggest pile of money ever gathered I none place: $5.6 trillion, a decade’s worth of projected federal surpluses. The Democrats in the hall wanted to spend much of that money; Bush wanted the bulk of it
returned to the taxpayer. He would have less than sixty minutes to sway the public’s mind. His case was clear and simple:
We have a big surplus.
We’re going to use some of it to increase spending on education and defense.
Then we’re going
to use some more of it to repay debt.
And with the money left over, we’ll cut taxes. Thank you, and good night.
Karen Hughes even contributed the night’s most quotable line: “Some say my tax plan is too big. Others say it’s too small.
I respectfully disagree. This plan is just right.”
Bush signed his tax cut into law on June 7, 2001. Bush’s opponents could only fulminate as he sent all that lovely money out of Washington forever, out of their reach, back home to its owners.
On behalf of the American people, I’m asking for a refund
We have increased our budget at a responsible 4%, we have funded our priorities, we’ve paid down all the available debt, we have prepared for contingencies and we still have money left over. Yogi Berra once said: “When you come to a fork in the road,
take it.” Now we come to a fork in the road. Even though we have already met our needs, we could spend the money on more and bigger government. That’s the road our nation has traveled in recent years.
Unrestrained government spending is a dangerous
road to deficits, so we must take a different path. The other choice is to let the American people spend their own money to meet their own needs.
You see, the growing surplus exists because taxes are too high and government is charging
more than it needs. The people of America have been overcharged and on their behalf, I’m here asking for a refund. Some say my tax plan is too big, others say it’s too small. I respectfully disagree. This plan is just right.
Source: Message to Congress (Budget outline)
, Feb 27, 2001
Get bigger paychecks in people’s pockets fast
Bush highlighted various groups of Americans that would benefit from the 10-year, $1.6 trillion tax reduction. A Bush adviser said, “We hope that we can accelerate the tax cut, or at least a major portion of it, to the start of this year - get bigger
paychecks in people’s pockets, smaller withholding as soon as possible.” Another Bush spokesman said, “The president intends to highlight that under his fair, responsible tax-relief plan, the typical American family will get to keep $1,600 more of their
Bush says the tax cut is necessary to stave off a recession, and many Democrats agree, although some believe a smaller cut of less than $1 trillion over 10 years is in order. Bush warned of ”troubling“ economic signs as he pitched
the tax-cut plan and Democrats responded that the proposal would disproportionately help the wealthy. The Democrats also argued that Bush’s tax cut and increased spending on improving schools, the military and Medicare would bring new deficits.
Retroactive tax cuts may bolster faltering economy
President-elect Bush said in an interview published Friday that he was open to the prospect of making tax cuts retroactive to Jan. 1, if that could spur growth in the faltering US economy. Bush called a recent suggestion by congressional Republicans to
backdate the tax cut “encouraging” and described himself as “open-minded” to discussing it. But for now he planned to send Congress his original $1.3 trillion, nine-year tax relief package, which would not take effect until 2002. “It’s the plan I
campaigned on,“ he said.
”I think the plan ought to not only fulfill the goals, which are reducing all marginal rates, simplifying the code, helping make sure the tax system is more fair to people at the bottom end of the economic ladder, getting rid
of the death tax, doing something on the marriage penalty.“ But if it looked as though retroactive tax cuts would help a faltering U.S. economy, then Bush said he would ”make that decision based upon where we are at the time.“
Source: CNN.com reporting from USA Today
, Jan 12, 2001
Claims lower income people benefit more than rich; untrue
Bush claimed last week that “most of the tax reductions” in his plan would “go to the people at the bottom end of the economic ladder.” He was wrong.
An analysis by Congress’s Joint Committee on Taxation shows that in 2005, Bush’s plan would reduce
taxes on households making $200,000 or more by $32 billion, or 27% of the total tax cut in that year of $120 billion. Households making less than $40,000 would receive $12 billion in 2005, or 10% of the total.
Bush has said in all the debates that his
plan would require people at upper-income levels to pay a greater share of federal income taxes. The analysis shows that households making $200,000 or more in 2005 would pay 27.4% of total federal income taxes under Bush’s plan, just as they do now.
Households making $100,000 or more would see their share of the total income tax bill tick up to 25.2%, from 25.1% under current law. Neither calculation considers the effects of the estate tax, which would benefit people at upper-income levels the most.
$500B to people earning under $100K; $800B to those richer
In the fierce debate over tax cuts between Gore and Bush, one fact has gone unnoticed: Both men would allocate roughly the same amount of money-$500 billion over nine years-to people making less than $100,000 a year. The other $800 billion of Bush’s
tax cut, including repeal of the estate tax, would mostly go to people in the wealthiest tax brackets.
Gore offers virtually nothing for taxpayers making that much money. Gore selectively targets his tax cuts to married couples and families and also
offers credits to nearly 30 million of the working poor.
Bush, instead, emphasizes cutting tax rates, especially the highest rates, so that most of the cuts flow to the people who pay most of the taxes. In the Bush plan, two-thirds of that $500
billion goes to people making between $50,000 and $100,000-and less than 5% of the overall tax cut goes to people making less than $30,000. People with no income tax liability-but who still pay payroll taxes-get almost nothing under the Bush plan.
Yes, wealthy get tax relief, but 6M poor will pay no tax
BUSH: If you pay taxes, you ought to get tax relief. The vice president believes that only the right people ought to get tax relief. I don’t think that’s the role of the president to pick: “You’re right, and you’re not right.” I think if
you’re going to have tax relief, everybody ought to get it. And, therefore, wealthy people are going to get it. But we’ve structured the plan so that 6 million additional American families pay no taxes. If you’re a family of four making $50,000, you get
a 50% cut in your federal income taxes. And I believe the people who pay the bills ought to get some money back. It’s a difference of opinion. He wants to grow the government, and I trust you with your own money.
Q: What do you say specifically to
what the vice president said tonight? He’s said it many times, that your tax cut benefits the top 1% of the wealthiest Americans.
BUSH: Of course, it does. If you pay taxes, you’re going to get a benefit. People who pay taxes will get tax relief.
Wealthy now pay 62% of all taxes; with his plan, 64%
BUSH [to Gore]: Under my plan, the wealthy people pay 62% of the taxes today; afterwards, they pay 64%. This is a fair plan. You know why? Because the tax code is unfair for people at the bottom end of the economic ladder.
GORE: Look, this isn’t about Gov. Bush, it’s not about me. It is about you. If everyone here in this audience [of several hundred] was in the middle of the middle class, then the tax cuts for every single one of you, all added up, would be less than the
tax cut his plan would give to just one member of that top, wealthiest 1%. Now, you judge for yourselves whether or not that’s fair.
BUSH: Fifty million Americans get no tax relief under his plan.
GORE: That’s not right.
BUSH: And you may not be one of them; you’re just not one of the right people.
GORE: That 50 million figure, the journalists are the keepers of the scorecard and whether or not you’re using facts that aren’t right. And that fact is just not right.
Bush said: “Everybody who pays taxes is going to get tax relief.” He would cut all tax rates, but a bipartisan congressional panel has found that nearly 27 million Americans might not get the full benefit because they would have to pay another tax
originally designed to prevent investors and the wealthy from sheltering too much of their income. The panel said some taxpayers would get no break at all from Bush’s plan, because of the so-called alternative minimum tax.
Source: Associated Press analysis of 2000 St. Louis debate
, Oct 17, 2000
All Americans deserve tax relief; no more “fuzzy numbers”
Q: What is the difference in your tax plans?
BUSH: He says he’s going to give you tax cuts; 50 million of you won’t receive it. He wants to make sure the right people get tax relief. Everybody who pays taxes ought to get tax relief. The wealthiest
Americans will pay a higher % of taxes than they do today, and the poorest of Americans won’t pay any tax at all. It is a huge difference. It’s the difference between big, exploding federal government that wants to think on your behalf and a plan that
meets priorities and liberates working people.
GORE: You haven’t heard the governor deny these numbers. He’s called them fuzzy. But the fact remains, almost 30% of his tax cut goes only to Americans that make more than $1 million.
BUSH: Let me give
you one example, the Strunk family. They make $51,000. They pay about $3,800 in taxes. Under my plan, they get $1,800 of tax relief. Under Vice President Gore’s plan, they get $145 of tax relief. Now tell me, who stands on the side of the rich?
Bush would like to cut taxes by $1.3 trillion over the next ten years. In particular, he would:
Introduce a new 10% lowest income-tax bracket for a couple’s first $12,000 in taxable income.
child tax credit from $500 to $1,000.
Replace the current structure of five tax brackets with four (10%, 15%, 25%, and 33%).
Reduce the marriage penalty (by which married couples pay more than cohabiting singles) by allowing
them to deduct 10% of up to $30,000 of the income of the lower-earning spouse.
Allow taxpayers who do not itemize their returns to deduct up to $7,200 of charitable contributions.
Eliminate the estate tax.
extend the corporate research tax credit.
Allow tax-advantaged savings accounts for education.
Source: The Economist, “Issues 2000 Special Briefing”
, Sep 30, 2000
Cut taxes on income, children, & inheritance
Bush would reduce the top two federal income tax rates -- 39.6 percent and 36 percent -- to 33 percent. The middle rates -- 28 and 31 percent -- would be reduced to 25 percent. The current 15 percent rate would remain, but some of the income now subject
to it would move into a new bracket. The child credit would be doubled, to $1,000 a child. The income cutoff on eligibility for the credit would rise to $200,000 for a married couple filing jointly from $110,000. The plan would reinstate a deduction
available to couples filing jointly to deduct 10 percent of the earnings of the lower-earning spouse, up to an earnings limit of $30,000. Mr. Bush would phase out the inheritance tax on large estates and gifts over eight years. Taxpayers who do not
otherwise itemize deductions would be allowed to itemize charitable contributions. A current provision giving credit to companies that engage in research would be made permanent.
More deductions for kids, education, charity, and marriage
Highlights of Governor Bush’s Tax Plan:
Double the child credit to $1,000
Replace the current five rate structure of 15, 28, 31, 36, and 39.6% with four, lower rates: 10, 15, 25, and 33%
Expand the charitable deduction to
Increase the annual contribution limit on Educational Savings Accounts from $500 to $5,000, and expand them beyond college, down to Kindergarten
Eliminate the death tax
Restore the Reagan 10% deduction for
two-income married couples, greatly reducing the marriage penalty
Eliminate the Social Security earnings test
Support an extension of the moratorium on Internet sales taxation at least through 2004
Oppose any taxes on access to the Internet
Veto any increase in personal or corporate income tax rates.
Source: GeorgeWBush.com, Tax Plan Fact Sheet
, May 27, 2000
Reduce share of tax burden on low- and middle-income
The Bush tax cut plan makes the tax code more progressive by providing the biggest percentage cuts to the lowest income earners. As a result, the share of the total tax burden shouldered by low- and moderate-income earners will decrease (from about
10 percent to slightly over 8 percent), while the share shouldered by those making more than $100,000 will increase (from less than 62 percent to more than 64 percent).
A single mother with one child earning $18,500 will receive a $500 tax cut.
A single mother with one child earning $22,000 will receive a $1,000 tax cut.
A single mother with two children earning $32,000 will receive a $1,500 tax cut.
Young people making just above the minimum wage will receive a $200 tax cut.
A family of four will not pay any income taxes until $36,500, saving up to $1,750.
As a result, six million families - one in five taxpaying families with children - will no longer pay any federal income tax.
Q: Is your anti-tax position one of convenience rather than conviction? What if the economy really turns sour? A: If there is a recession, it’s important to cut the taxes to make sure our economy grows. It’s also important to cut the taxes when there is
apparent times of plenty as an insurance policy against an economic slowdown. And it’s important to cut the taxes to make sure Washington, D.C., does not spend the surplus. I have laid out a plan that not only encourages economic growth. I’ve laid out a
plan that is more fair than the current code because it knocks down the toll booth to the middle class.
Q. So, Governor, is this no new taxes so help me God? A: This is not only no new taxes. This is tax cuts so help me God. There is a mindset
in Washington that says if we have extra money let’s create more federal government. That’s not the way I think.. Rather than create more government, I think we ought to pass money back to the working people in America.
Bush adopted the National Governors Association policy:
State tax policy is closely linked to federal policy. 36 states currently use either federal income or federal tax liability as the state tax base for personal income taxes. It is critical that Congress and the administration do not enact tax reform in a vacuum, but in consultation and in partnership with the nation’s Governors.
National Sales or Value-Added Tax The nation’s Governors oppose a national sales or transactional value-added tax. Such taxes would intrude into a tax area that has traditionally been reserved for and relied on by state and local governments. If enacted, either of these taxes would seriously threaten the ability of state and local governments to maintain their tax base.
Current Income Tax If Congress decides to reform the current tax system, they should reduce the complexity of current income taxes; increase incentives to work, save, and invest; and increase efficiency and fairness. As part of any reform of the
current income tax, the nation’s Governors would oppose any modification to the deductibility of state income taxes, property taxes, and the interest on state and local bonds.
Transition If major tax reform is enacted, it should not be implemented for at least three years, to give states ample time to adjust their own tax systems.
Information Needs of the StatesThe ability of states to tax various revenue sources depends to a large extent on information that only the federal government can collect. This is becoming much more important given the complexity of both the international and domestic economies in tracing where goods and income are generated. It is critical that the federal government separate tax reform per se from the information that is collected from individuals, businesses, and corporations with respect to income generated. The data collection role of the federal government must be developed in partnership with state and local governments.
Source: NGA Executive Committee Policy Statement EC-9 00-NGA1 on Feb 15, 2000
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