Not All Tax Cuts Are Created Equal
Posted January 22nd, 2009 at 3:21pm in Ongoing Priorities 
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For over a year, the federal government has been trying to stimulate the economy using the same Bush/Obama Borrow and Bailout approach. Specifically policymakers have:
- Increased total federal spending by 11 percent to nearly $3 trillion;
- Enacted $333 billion in “emergency” spending;
- Enacted $105 billion in tax rebates; and
- Pushed the 2009 budget deficit to a record $1.2 trillion in the name of “stimulus.”
Now congressional leaders want to keep digging by adding another $825 billion in deficit spending and targeted temporary tax cuts. We have no reason to believe Congress’ next, and bigger, round of deficit spending will be any more effective than the first. What’s more, the temporary and narrowly targeted tax cuts in the bill are designed to redistribute wealth, not create it.
There is an alternative: permanent tax reducations such as the ones Congress passed in 2003. Tax cuts like those have a proven track record of encouraging economic growth. Just look at the attached chart tracking five major economic indicators in the six quarters before and after President Bush signed the tax reductions into law. The cuts got results because they were designed to increase market incentives to work, save, and invest, thus creating jobs and increasing economic growth. In the seven quarters that followed, by the way, 5 million jobs were created.
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11 Responses to “Not All Tax Cuts Are Created Equal”
John Galt, Jacksonville on January 22nd, 2009 at 3:21pm said:
I am not sure why it is difficult to understand taxes…they take money from your wallet, send it to Washington, filter it through all of the layers of fat only to send you a small portion of it back in the form of a stimulus check or works program. Wouldnt it make more sense for you to take the money directly out of your wallet and spend it directly YOURSELF???
Austin, Provo, UT on January 22nd, 2009 at 3:21pm said:
Even more so, most people don’t know the difference between tax rebates and tax cuts. Obama likes to call his plan “tax-cutting” when, really, all he’s doing is handing out money.
Bush tried the same thing last year, and it obviously didn’t do anything. The 2003 tax cuts were different because they reduced tax RATES, which creates an incentive to work, save, and invest. Simply handing out money doesn’t stimulate the economy, and government must TAKE before they can GIVE money to the people.
Reducing tax RATES have been proven to stimulate the economy. These 2003 tax cuts are another case in point.
Ozzy6900, CT (The Blue State) on January 22nd, 2009 at 3:21pm said:
I’ve often thought of a “flat tax”. A specific percentage (for example 3%) is charged to everyone. No deductions and no exemptions. If you earn $10,000 you owe $300. If you earn $100,000 you owe $3000. Everyone pays, no one is exempt and the Government has to get by with what we give them.
Just a thought
David Widmer, Brunswick, ME 04011 on January 22nd, 2009 at 3:21pm said:
Why is it that I never hear anything about the Fair Tax?! So much can be achieved should this legislation be enacted! Can you imagine?: No more IRS! NO TAX CODE!! No corporate tax!: All the businesses that have gone away from our shores would COME BACK HOME!! Even foreign companies would COME HERE TO OUR SHORES to do their business; can you imagine even that?? Think what it would do for our economy? And our earnings: we would have what we earn, when we earn, immediately!! No withholdings! Think of the spending increase that would occur. And face it, we are CONSUMERS, so FairTax would garner plenty of income for our GOVERNMENT, which, having to justify its spending (no more PORK BARREL STUFF!!), just maybe the spenders might be more prudent in their spending.
Seems, to me, this is a “no brainer”! Why can’t it get going? Support S25 and H25, both of which is legislation enacting the Fair Tax, which is being re-introduced each year! Write your Congressman/woman, (and read “The FairTax Book” by Boortz)! Encourage your representatives in Congress to join in support of this “makes sense” effort!!
‘Nuff said!
David N. Widmer, DMD
Brunswick, ME 04011
dnwidmer@gwi.net
Ryan Hays, Rowlett, TX on January 22nd, 2009 at 3:21pm said:
You never hear about the Fair Tax because anytime it is brought up in discussion or debate the liberals just interrupt and scream that it is increasing the tax you pay on everything 23%. In reality everything you buy is “marked up” something like 20% (I can’t remember so that may be off). The Fair Tax gets rid of that and in real terms is increasing the amount of money that you spend on a pair of pants maybe 3%, but you don’t pay any tax on your earnings. Most people just don’t want to take the time to listen or research things like this so they immediately shoot it down because some liberal politician tells them to. If you need more evidence of its merit look at the countries that have enacted the Fair Tax.
Peter Asher .. Oregon Coast on January 22nd, 2009 at 3:21pm said:
There is FAIR and there is welFARE, this stimulus plan,this current government, is all about the welfare state.
When there are not enough taxpayers to fund these freeloaders then it will all come tumbling down. Atlas WILL shrug!
Why don’t they see it coming? Well neither did Hitler or Stalin and all those others.
Hozro1, Oregon on January 22nd, 2009 at 3:21pm said:
Prior to May 28, 2003, we had already experienced 9/11, and begun our involvement in iraq and Afghanistan.
What we had not (We being all of America) was the movement of the same cancerous people who were responsible for the collapse of ERON into the Stock Market and Investment firms.
The ‘Bailout’, was a necessity, to stop a runaway train towards panic. Now the train has stopped and ‘Bailout’ funds are not the fuel it needs to get started once again on a correct path of employment, profit, and expansion.
Congress needs to enacts very stiff and harsh penalties for so called ‘White Collar’ crimes, as those committed at ENRON.
Congress needs to learn to listen with neutral ears when advised that entities such as Fannie Mae and Freddie Mac need tighter regulating and scrutiny! Congress need also create Laws to prevent ‘Profiteering’ on necessary quantities needed by Americans to survive, such as Oil!
Hozro
Marshall Hill-Michigan on January 22nd, 2009 at 3:21pm said:
Stop Taxation and you give people money to spend
without any Major work to get Stimulus!From the
” Keep it Simple Foundation!”
Marilynn Lynn on January 22nd, 2009 at 3:21pm said:
The Democrates are not interested in WE THE PEOPLE they are trying to create a country of dependents on the government. One world?
Mike, Hickory, NC on January 22nd, 2009 at 3:21pm said:
I’ve said it before, and the facts and evidence repeatedly prove it: To Leftists/government elitists, such as Obama, Reid, Pelosi, Co, the facts don’t count, only their Leftist/government elitist agenda counts.
Dean Moriarty on January 22nd, 2009 at 3:21pm said:
Isn’t the use of those 6 quarters kind of dubios? I mean, you are comparing the bottom of a recession to the peak of a recovery, much like many conservative economists liked to use when looking at the early 80s economic indicators with Reagan. Also similar to those comparisons is the willful neglect of Federal Reserve Policy (which essentially created the recovery in the early 80s with Volcker’s disinflationary program), and which was extremely accomodating during the Bush administration with Greenspan.
I don’t like paying taxes, but I’m not really all that impressed with this “analysis.”