Pic Of The Moment: Stop Me If You've Heard This On

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The Legacy of the 2001 and 2003 “Bush” Tax Cuts

AKA "Righty does not care one bit what things cost or how much
something hurts the U.S."

March 31, 2017

by Emily Horton

Despite promises from proponents of the tax cuts, evidence suggests that they did not improve economic growth or pay for themselves, but instead ballooned deficits and debt and contributed to a rise in income inequality.

The tax cuts were financed by borrowing, which increased the national debt . The 2 percent of GDP figure does not include the extra interest costs resulting from that additional debt. However, in 2013 we estimated that the Bush tax cuts — including the portion made permanent after 2012 — would add $4.2 trillion to deficits over 2009 to 2019, taking into account the associated debt service costs.[7] This meant that the Bush tax cuts would be responsible for roughly 40 percent of federal debt owed by 2019.

And, when the tax cuts were scheduled to expire at the end of 2012, extending the high-income tax cuts in particular was projected to have almost no effect on economic growth. The Congressional Budget Office (CBO) estimated in 2012 that extending the high-income tax cuts would have boosted GDP by just 0.1 percent in 2013.[16]

Indeed, allowing the high-income tax cuts to expire after 2012 does not appear to have had any substantial negative impacts on economic growth, as proponents of the tax cuts had claimed, and the economy has continued to grow steadily since then.[17] This is consistent with the broader empirical literature about taxes on high-income people and economic growth.

Hmmmm, empiricism VS RW 'fairy dust economics', which should we choose?

As one comprehensive review of the empirical literature by three leading tax economists found, “there is no compelling evidence to date of real responses of upper income taxpayers to changes in tax rates.”[ 18]

Center on Budget and Policy Priorities
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