BUSH TAX CUTS REVISITED
Submitted by Mr Clean on Tue, 09/14/2010 - 1:26pm
The “Bush Tax Cuts” (BTC) were originally proposed by then Republican presidential candidate George Bush during the 2000 campaign. Less than 5 months after Bush took office in January 2001, he signed into law the “Economic Growth and Tax Relief Reconciliation Act of 2001” (EGTRRA) on 6/07/01. The new legislation included 441 tax and pension law changes (source: BTN Research).
The cost of the BTC (i.e., an estimate of the reduction in federal revenue that would occur) over the 10-years from 2001-10 was projected to be $1.3 trillion. The cost of the reduction of all marginal tax brackets was the largest piece of the $1.3 trillion amount, totaling $727 billion over the 10-year period. Other tax features of the BTC included a doubling of the child tax credit and an elimination of federal estate taxes by the end of the decade (source: Joint Committee on Taxation).
The 2001 EGTRRA legislation included numerous other provisions, e.g., increased 401(k) limits (up from $10,500 in 2001), a catch-up feature for 401(k) plans (a feature that did not exist in 2001), higher annual addition limits for retirement plans (i.e., Section 415 limitations) and faster vesting for defined benefit pension plans (source: EGTRRA).
EGTRRA created a new 10% marginal tax bracket (from the previous lowest rate of 15%) retroactive to 1/01/01. Further marginal tax rate reductions (including a decrease of the top marginal bracket to 35% from 39.6%) were scheduled to be phased in and fully implemented by 2006 (source: EGTRRA).
AFTER THE CUTS WERE IMPLEMENTED - Individual income taxes collected by the US government rose from $858 billion during fiscal year 2002 (i.e., the 12 months ending 9/30/02) to $1.16 trillion during fiscal year 2007, an increase of +35.5% or +6.3% per year (source: Treasury Department).
If you follow this closely, you’ll see that the Bush Tax Cuts INCREASED the amounts flowing to the US Government, fairly dramatically. Who wouldn’t take a 6.3% yield in this day and age?
Fuzzy Math
Simple analysis is nice and clean, but rarely accurate.
Had the tax rates remained at FY 2000 levels, how much revenue would have been collected from individual income taxes by FY 2007? Your analysis suggests that revenues in FY2007 would have been the same as in FY2002 if tax rates had remained unchanged.
It's also interesting that your analysis did not extend to FY 2008 or FY 2009, for which data is available. FY 2008 receipts were $1.146 trillion, and FY 2009 were $915 billion (from individual income taxes).
So extending the analysis another two years....$858 billion to $915 billion over seven years....total gain of 6.64% over 7 years...less than 1% per year. Of course, I'm guilty of using your faulty analysis...
But thanks for playing. I'm sure James will offer some lovely parting gifts.
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Not everything that can be counted counts, and not everything that counts can be counted. -- sign on Einstein's office wall.
BUSH TAX CUTS
Maybe you haven't heard but there is a recession so individual tax receipts will go down.The years we had a tax reduction and no recession prove that tax cuts stimulate the economy.When people have more money they invest it.Which creates jobs.The recessions main cause was Congress forcing banks to make bad loans to those who should have never received them and too low interest rates.The worst culprit is Fannie and Freddie which are sitting on over $1T of bad loans.I know you big government people like the class warfare strategy but the facts are that lower taxes create jobs and prosperity.Even the democrats in Congress are realizing this fact now and are running away from Obama as fast as possible.
Mr Clean
I suppose the big nasty guvmint also forced Goldman Sachs
and it's cohorts (including Moodys Ratings) to create and sell all those worthless investment packages made up of un-valueable securities and mortgages...better known as Consolidated Debt Instruments?
The Guvmint also forced all those other brokerages/dealers and AIG to come up with/buy/sell insurance plans that let all those parasites play an all win/no lose game at the taxpayer's expense? And, who was the worthless sack of s..t in the White House? What party was running Congress?
You need to crawl back to the outhouse and let go some of the gas there rather than here.
Stan Bozarth
BIG NASTY GOVERNMENT
Since most here live in a socialist dream world I will explain finance to you.Any one who sold or bought CDO's or CDS's believed that the vast majority of those who took out mortgages would pay their mortgage.When the bums who took out 100% mortgages(Congress forced banks to make these loans)defaulted it created a cascading effect.However that was just a small part of the recession.As you recall all of the CDO'S and CDS's have been paid by the TARP funds.As a matter of fact Goldman and other huge financiers were paid 100%.The taxpayer is holding the debt now at Fannie and Freddie.Over $1T.It was paid by the Obama administration with the slogan,"too big to fail."
The major part of the recession is the uncertainty and social engineering that Obamanomics has created. Trillions of dollars of deficit spending and new give away programs has all but killed our economy.Anyone who runs a small business,which contributes almost 70% of all jobs,understands.The banks and finance companies are now in great shape.But small business has been ignored.
If not for the 25% increase in the size of the federal government in 18 months,health care bill(which will be dramatically changed shortly),and trillion dollar deficits as far as the eye can see the recession would be over.
Mr Clean
You are an idiot
It took George Bush eight years to create this recession, and it will take even longer to dig out of it.
Dick Burr voted yesterday against tax breaks for small businesses. Your hero, I know.
James
PS From this post forward, I will begin deleting any post or comment you make in all caps. Thank you in advance for cooperating to make BlueNC remain an attractive website.
Do good. Be nice. Have fun.
Thanks for the lesson.
As a grad of Rutgers corporate Advanced Banking School, I know my understanding of finances is limited to mostly factual/operational stuff, so I appreciate you expanding my knowledge with your ideas... Obviously you attend the Glenn Beck school of bat-shit crazy conservatism.
Try pulling your head out of your rectum.
Stan Bozarth
That's the biggest collection
of misinformation I've seen since the heady days of the Politburo.
Most of those who sold CDS's knew how rotten they were, which is why they sold them in the first place. And (unfortunately) many of them haven't been paid for, although the banks have paid us (the taxpayers) back most of the TARP funds. There's still a lot of troubled assets hanging out there.
Subtracting the temporary Census workers, most of whom are no longer on the books, Federal government has grown (net) less than 2% since Obama took office.
Given these options its not hard to decide
which way is up
I CAN TYPE IN ALL CAPS TOO
So how is there a recession after 5 or 6 years of tax rates at unprecedented low levels?
Corporations are right now enjoying record profits, and are sitting on record amounts of cash. Banks are holding unprecedented levels of cash in reserve. There apparently is plenty of money to "invest," as you say. But where are these mysterious jobs of which you speak?
But it is nice to see someone bring out that time-tested strategy: take credit when things are going well, and blame someone else when it all goes to hell in a handbasket.
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Not everything that can be counted counts, and not everything that counts can be counted. -- sign on Einstein's office wall.
Mr. Clean
is an occasional visitor with a tedious habit of repeating him/her self ad nauseum, spouting the same right wing fantasies and delusions.
You are absolutely correct about corporate profits and jobs. Today there is ZERO correlation between the two, with corporate leaders reporting unprecedented cash on hand and no intention of workforce expansion until the recovery kicks in. And the recovery isn't going to kick in until employment picks up.
There's a reason they call it the death spiral ... it is free-market fanaticism at its toxic worst ... and a breathtaking gap between the wealthiest and everyone else.
Corporate America is pissing on regular people ... gives new meaning to the term "trickle down."
Do good. Be nice. Have fun.
Exactly
And now they're pumping hundreds of millions from those profits into election campaigns, just so people like Dick Burr will shield them from paying their fair share of taxes. Which, by the way, is also contributing to the deficits and debt conservatives love to whine about.
From the CBO:
Trickle down
I thought that's what it meant when I first heard it in 1980...
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Not everything that can be counted counts, and not everything that counts can be counted. -- sign on Einstein's office wall.
Details about the Obama plan to end Bush tax cuts for the rich.
A tax cut is a reduction in taxes. Its immediate effects are, generally, a decrease in the real income of the government. With visions of endless government surplus, the Bush tax cuts were implemented. They expire along with 2010, with visions of endless and growing government deficits on the road ahead. Those making $200,000 years and above would say goodbye to the Bush tax reductions under Obama’s proposal, while everybody else gets a two year extension. The GOP contends the wealthy will curb spending vital to financial growth if their taxes are increased. Obama uses deficit reduction as his rationale for leaving individuals considered wealthy out of the tax cut equation. Whether or not extending the Bush tax cuts for everybody or just the middle class will spur growth or reduce the deficit is a moot point to a few experts, who do not consider either approach a solution. Regardless of who may be right, Congress is too distracted to do much about this. With November elections drawing near, fearful Democrats who want to be re-elected have put off voting on an issue that involves taxes.
A slight rewrite
Maybe a better way to say this:
Do good. Be nice. Have fun.