Free Markets, Free People

Bush tax cuts – it’s not your money, so quit whining

William Gale regales us with what he calls "Five myths about the Bush tax cuts" , in the Washington Post today.

Highlights, or lowlights if you will, of a couple of them are as follows.  “Myth” one:

Extending the tax cuts would be a good way to stimulate the economy.

And the ammo that makes it a myth:

According to the Congressional Budget Office and other authorities, extending all of the Bush tax cuts would have a small bang for the buck, the equivalent of a 10- to 40-cent increase in GDP for every dollar spent.

So a 10% to 40% increase in GDP – at this time – is something to sniff at?  Note how he worded the increase.  He used the word “cent” instead of “percent”.  Yeah, no attempt to shade the point at all, huh?

Then this:

As the CBO notes, most Bush tax cut dollars go to higher-income households, and these top earners don’t spend as much of their income as lower earners.

Right.  A) they’re the ones who actually pay taxes – many lower income earners do not.  B) “Spending” is a loaded term.  The high income earners don’t bury their money in the back yard safely tucked into a coffee can.  They invest it.  And, for those paying attention, it is investment in the economy that’s lacking at this time.

The rest of the “myths” are as pathetically argued as the first.

In reality, this is just another in a long line of liberal justifications for taking your money based in the premise that it isn’t really yours to begin with.

If you don’t believe me, look at “myth” 3 which states “Making the tax cuts permanent will lead to long term growth.  Gale says:

A main selling point for the cuts was that, by offering lower marginal tax rates on wages, dividends and capital gains, they would encourage investment and therefore boost economic growth. But when it comes to fostering growth, this isn’t the whole story. The tax cuts also raised government debt — and higher government debt leads to higher interest rates.

Note that Gale tacitly admits that the "myth" is actually true. However he tries to caveat that with a horrible result that I assume he believes effectively destroys the point. The tax cuts “raised” government debt.

Uh, no, they didn’t. Excessive government spending without the revenue raised government debt. These tax cuts have now been in place for years and government debt has grown exponentially. How is that the fault of a tax cut or the tax payer?

Of course it’s not – unless you believe that money, all money, really belongs to government and it gets to decide how much you can or can’t have. How else do you claim allowing an earner to keep more of what he earned as a cause for "increased government debt?"

Of course Gale forgets one of the aspects of letting the tax cuts expire – but I suppose that’s because it’s not a "myth" in his book. A recent study finds the following to be true as a result of letting the Bush tax cuts expire:

The study found that raising just the lowest income tax rate from 10 percent to 15 percent would cost 88 million taxpayers an average of $503 next year.

Lowering the child tax credit from $1,000 to $500 per child would cost 31 million families an average of $1,033 in 2011; the reinstatement of the so-called marriage penalty, a peculiarity in the tax code that forces some married couples to pay more for income tax than they would if they were single, would cost 35 million couples an average of $595 each, according to the preliminary numbers.

[…]

Income tax rates will rise for almost every bracket, with the bottom rate going from 10 to 15 percent and the top rate going from 35 percent to 39.6 percent. Dividends and capital gains taxes also are expected to rise.

So the “your taxes won’t increase by a single dime” pledge for the gullible 95% was a crock and they should have known that when Obama promised to end those tax cuts.  But it’s hard to do that when you’re also gulled into believing that they were only tax cuts “for the rich”.

In fact, they were across the board tax cuts and now the middle-class will discover that at the end of the year as they crank up the Turbo Tax and are shocked, shocked I tell you, that their taxes have increased.

And that’s no myth, my friend.

~McQ

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27 Responses to Bush tax cuts – it’s not your money, so quit whining

  • According to JP Morgan Chase the revenue that would be raised in 2011 as a result of letting the tax cuts lapse would be around $230 billion.  10% of that would be $23 billion.  That’s a pretty negligible amount of incremental GDP for a $15 trillion economy.  .15%?
     
    While I agree that our real budgetary problem is entitlement spending, particularly Medicare, I think that tax increases have got to be on the table, too.   Rather than letting them lapse altogether in 2011 I’d favor phasing the increases in based on specific criteria to reduce the minor but legitimately deleterious effect on the economy it would represent.

  • Imagine with me the whining and carrying on that would have occurred about these tax cuts had they been implemented by a real conservative, as opposed to the satirist thatBbush certainly was.

  • Yes, the world is filled with intelligent imbeciles.
    Starting with the given that the “stimulus” had a multiplier of 0.9, if the “Bush” tax cuts are worth 10 to 40 cents on the dollar in stimulus,  losing them won’t exactly help and will probably  leave us with a “wash”  … one expensive wash at that.

  • I’m willing to have all the Bush tax cuts expire.  W & Company may have driven the US into a ditch.  Hussein is trying to drive it off the rim of the Grand Canyon — and I’m willing to let him, on the premise that some of his passengers (us) will survive, and NONE of the current “drivers” will.

  • http://legalinsurrection.blogspot.com/2010/08/what-dont-you-understand-about-its-not.html
    Jacobson says it well…

    The argument over specifics is besides the point. It’s just more class warfare, presuming that someone who is successful needs to be punished.

    These Democratic talking points reflect the fundamental disconnect: It is not your money.

    I think the American people understand that point. The government works for us, not the other way around.

    You either believe it, or you don’t. The Democratic Party doesn’t.

  • Taxation has been between 18% and 20% of GDP for the last 50 years.  Spending is now 25% of GDP.
    If the “Bush” tax cut expire, come hell or high water, taxation will be between 18% and 20% of GDP.

    • Except that real, private sector GDP is stagnant or falling, so re-do the math.

  • Not that long ago the New York Times ran an article that admitted that the rich drive the economy, with the top 5% richest being responsible for 33% of the economy. How does that fit with the “rich don’t spend that much” theory of this clown? Does he think they buy a big vault and swim around in their money like Scrooge McDuck?

  • The tax cuts also raised government debt.

    Incredible.  It’s government spending that raises the debt.  But to the morons in Washington, debt is caused by a limit or decrease on how much they can take from the people.  It’s not the government’s debt, it’s the debt of those whose hard-earned income the government believes it is entitled to steal in whatever amounts it pleases to fund its limitless largesse.  What planet are these people from?

    • They are from the same planet that has determined that “the rich” must spend at least X% of their income, or it will be spent for them.  To wit:

      most Bush tax cut dollars go to higher-income households, and these top earners don’t spend as much of their income as lower earners.

      Imagine the gall of those higher-income households, trying to do something responsible like save money!  They must be taught a lesson, and who better to teach lessons on how to be irresponsible with money than the federal government?

  • In the first place we let the media and the Donks get away with such a lie for a decade. Those were very very progressive tax cuts because they dropped millions of lower income people off the rolls altogether.

    It only goes to figure that if a person is being taxed at a 37.5 percent rate, and another person is paying a ten percent rate then if you cut taxes evenly, then the guy paying 37.5 will certainly have a bigger tax cut.

    It is just sickening that this Marxist philosophy has permeated our entire system.

  • I believe my wife and I feel the same way as most Americans who have worked in the private sector all of our lives – our professional political class stinks to high heaven.  They are overpaid, ignorant of basic business and economics, do NOT believe in our Constitution and it’s time to STOP THE MADNESS.

    The ignorance of our educators and leftists in our colleges and universities is destroying our children’s ability to appreciate our heritage and understand the present.  Public employees are overpaid and their benefits must be cut.  We are beginning a New American Revolution! 

    It’s time for the socialists in Congress and Marxists in the White House to leave, take their redistributionist ideas with them and “get out of our lives”. 

  • These tax cuts have now been in place for years and government debt has grown exponentially. How is that the fault of a tax cut or the tax payer?

    Well, in one sense, it is.  The tax payers are the voters who elected the people who ran up the debt.
    As for those who think that tax cuts raised the debt, these people are the same bunch who actually believe that corporations actually pay taxes just because there are corporate taxes.
    Bruce, I look forward to your Pundit Review appearance each Sunday evening.

  • We need a different ‘Paygo':  Everycent of tax increase should have to be offset by two cents in spending decreases while in deficit.  In fact, no tax increases at all until you reduce spending.
    Also. . .democrats own the deficits from 2006 on, when they controlled congress.  Look at when the bigger deficits are.
     

  • Obama promised that he would not raise taxes on people making under $250k. If the Bush tax cuts expire, it will not be Obama who raised their taxes, but Bush; he is the one who signed the law that will raise their taxes, not Obama. This was all foreseen at the time of the Bush tax cuts; he could have chosen to push for a permanent tax cut, but instead gambled on a temporary one. This is the result. As in every other aspect of his administration, Bush was incompetent at cutting taxes, too.

    • The best is the enemy of the good.  But since we’re blaming Bush for not reaching perfection while in office, shall we also blame him for not passing term limits, a balanced budget amendment, and a line-item veto; eliminating the national debt; reforming Social Security, Medicare, Medicaid, food stamps, and WIC*; and finding the Holy Grail, the Ark of the Covenant, and the Golden Fleece?

      Bush has his black marks just like any other president (prescription drug benefit; what the hell was he thinking???), but blaming him for the curret economic mess because he didn’t – somehow – make tax cuts permanent is bloody silly.  We might as well blame Slick Willie, Bush Classic, and every other president since Wilson for not repealing the XVI Amendment.

      • I wrote nothing about blaming Bush for the current economic mess. I blame him for the upcoming massive tax increase for the simple reason that he pushed for and signed the law that will make the tax increase happen. He could have chosen to pass a smaller, permanent tax cut; that would have been much harder to repeal, as it would take an act of Congress to do so. There were many fiscal conservatives at the time that argued for him to follow that path. He chose instead to push for and pass a temporary tax cut, which requires only that Congress do nothing to repeal it. Congress is very good at doing nothing.

  • This was all foreseen at the time of the Bush tax cuts; he could have chosen to push for a permanent tax cut, but instead gambled on a temporary one.

    Were you in diapers at the time of the Bush Tax Cuts?  The only way he could get the bill through both houses of Congress was to put an expiration date on them.  With each following Congress, he tried to either extend them or make them permanent.

    Take your “Blame Bush” meme to a posting that might be sympathetic to your agenda and equally ignorant of history.

    • No I was not in diapers; I was working, and paying high taxes, and paying attention; perhaps you should try it.  There were plenty of people on the right arguing for a smaller, permanent tax cut better targeted at growth rather than the terrible cut he chose to push. Everyone at the time knew it was a gamble; he was betting that there would be too much pressure on Congress to extend the cuts for them to let them expire. Well, here we are, and they are almost certainly going to let the high income tax cuts expire, and the estate tax cuts, and possibly more.
       
      The end result will be that he will have moved even more people off of the income tax cut rolls, the marginal rate on high income earners will go up, and the estate tax will be back to where it started. Obama has done plenty of bad things; blame him for those. This one will be the Bush tax increase.
       

      • Its very convenient to blame Bush since he’s gone. . .the Obama administration hasn’t stopped doing that since day one.
        But if, as you say, targeted tax cuts are the way to go, why isn’t Obama advocating them?
         

        • You’ve apparently confused me with someone who thinks Obama has a clue.
          Criticizing Bush does not mean supporting Obama; Obama’s economic policies have been just as bad as anyone sane would have predicted. The difference is, they have been what his supporters expected and wanted. Bush, on the other hand, was supported by many fiscal conservatives, and was a massive disappointment. The problem many Republicans are going to have in upcoming elections is that for many of us, ‘not-them’ is no longer enough.

          • Obama in fact was all over the place in 2008, pretty much saying things that could be taken any which way. Anyone not paying close attention, and applying critical thinking, would have not known what Obama’s economic ideas were, exactly.

            And Bush ran as a “compassionate conservative”, and his history in Texas included passing a major education bill.

            There were signs warning us about both of them. But in the case of Bush, the alternate choices–Gore, Kerry–were always much worse.

            I also don’t but that this is Bush’s tax increase. This is the decision for the current POTUS, not the last one. You are in effect arguing that Bush made a poor decision in the tax cuts he passed. Perhaps, but they were still tax cuts.