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  • Tax Cut Facts

    Since the economy is set to be a key issue in the general election, tax policy will be a major point of departure for the two eventual nominees. Both leading Democrats have pledged to end the Bush tax cuts arguing that they only benefited upper income tax payers and that they also starved the government of needed revenue. Both arguments are false.

    On the wealthy’s share of the tax burden Heritage Foundation Center for Data Analysis director Bill Beach notes:

    The top five percent of income earners paid 59.7% of all income taxes in 2005, which was the highest percentage in the past 20 years. Tax share records were also set by the top 10, top 25 and top 50% of income earners. In other words, every category of high income taxpayer as defined by the IRS paid a higher share of taxes in 2005 than they have since 1986, the earliest date for which the IRS provides data.

    On government revenues since the 2001 tax cuts Beach points out:

    The CBO provides data on revenues as a percentage of GDP from 1962 through 2007 and forecasts of the revenue percentage for 2008. Since 1962, the long-term percentage has been at or near 18% of GDP. In 2000, this percentage stood at a whopping 21.4%, its record since 1962. … Then the recession set in and revenues dropped steadily through 2002. By 2003 the slow economy and the tax cuts of 2001 had reduced the percentage to 16.1%. Congress cut taxes again that year. Interestingly, revenues began to respond to the stronger economy that the 2003 tax changes encouraged. … By 2005, the percentage had climbed to 17.4%. By 2007, they had risen again — to 18.6%. For 2008, the CBO expects the revenues as a percent of GDP to stand at 19%, significantly above the long-term trend of about 18% of GDP. … If there was anything that starved Washington of revenues, it was a sluggish economy, not the tax cuts.

    Posted in Economics [slideshow_deploy]

    4 Responses to Tax Cut Facts

    1. Frank Bonilla, clebu says:

      I think that the democrats have a point. but at the same time for a hard working man making it check bye check and staying in one job only (thats the key keeping one job)that extra tax money that thay they are cutting keep it and use like it was shown like a tax would be shown in a check stub kind of like a saving at the end of the year. I think this would slow a lot of turn overs in the work place. And it would be a good encentive for the average joe.

      thank you

      Frank Bonilla

    2. Stan Chadwick, Stanw says:

      I just don't who to believe anymore, you say the

      top 5% pay 59% of the taxable income yet you fail

      to mention how much of total income the top 5%

      make. Exxon mobile made 16 Billion in the 3rd

      quarter and George Mccain wants to give them a tax

      break and saw on TV that63% of Corp. in the US

      pay no taxes. Where can't you so called experts

      put all the facts on the table in stead of half


    3. sandyshores says:

      One important issue that no one talks about is how high will everything the average family buys go up when the taxed businesses have to pass on the extra burden of Obamas taxes get passed to the consumer?

    4. Thomas Sawyer says:

      I am 66 years old, and retired. Luckly, I was smart enough to take all my savings out of the market before the recessionenduced recent declines. The Demecratis plan is more sound,and is much better for the largest

      %age of the nation, and thats what we as a nation are all about.

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