Tuesday, January 30, 2007

Tax cuts soak the rich

Not really, but the tax cuts on capital gains of 2003 increased tax revenues by 68%, according to the Congressional Budget Office. I've been looking for a good summary rather than the huge report for a link. But here's a graph of just how far off the CBO has been in their estimates. The forecast for 2006 was $57 billion, but actual receipts were $110 billion. Maybe they were weather forecasters in an earlier life?

So what happened? Lowering the rate, according the WSJ, provided incentive to sell, and that meant money to reinvest which meant more growth, which meant more jobs, which meant more taxes for our Congress to spend.

Even if it means more tax money, it still makes Democrats mad because they don't want anyone in the top percentage of wealth (except Kerry and Edwards) to get a break. So they're still talking about repealing the "tax break for the rich." They'll have some 'splaining to do since the rich now pay even more.

Ten Myths About the Bush Tax Cuts—and the Facts. Check the full story at Heritage Foundation

Myth #1: Tax revenues remain low.
Fact: Tax revenues are above the historical average, even after the tax cuts.

Myth #2: The Bush tax cuts substantially reduced 2006 revenues and expanded the budget deficit.
Fact: Nearly all of the 2006 budget deficit resulted from additional spending above the baseline.

Myth #3: Supply-side economics assumes that all tax cuts immediately pay for themselves.
Fact: It assumes replenishment of some but not necessarily all lost revenues.

Myth #4: Capital gains tax cuts do not pay for themselves.
Fact: Capital gains tax revenues doubled following the 2003 tax cut.

Myth #5: The Bush tax cuts are to blame for the projected long-term budget deficits.
Fact: Projections show that entitlement costs will dwarf the projected large revenue increases.

Myth #6: Raising tax rates is the best way to raise revenue.
Fact: Tax revenues correlate with economic growth, not tax rates.

Myth #7: Reversing the upper-income tax cuts would raise substantial revenues.
Fact: The low-income tax cuts reduced revenues the most.

Myth #8: Tax cuts help the economy by "putting money in people's pockets."Fact: Pro-growth tax cuts support incentives for productive behavior.

Myth #9: The Bush tax cuts have not helped the economy.
Fact: The economy responded strongly to the 2003 tax cuts.

Myth #10: The Bush tax cuts were tilted toward the rich.
Fact: The rich are now shouldering even more of the income tax burden.


murrayT said...

There is so much lying and distortions going on in government to support the infighting that you don't know what or who to believe. All I know is that we send our government more tax money than they need to properly run the country and the more we send the more they waste. This is one fact that is partisan.

Norma said...

I agree. And now the Democrats want to take even more, but will probably reduce it by rescinding the tax cuts. Go figure. Although by stopping investments in the economy, they could produce more poor people insuring they keep their own jobs.