# Effects of Bush's tax cuts **URL:** \ **Category:** Great Debates\ **Created:** [October 28, 2005, 3:49pm UTC](https://boards.straightdope.com/t/effects-of-bushs-tax-cuts/328326 "2005-10-28T15:49:31Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![Debaser](https://avatars.discourse-cdn.com/v4/letter/d/3da27b/32.png) [@Debaser](https://boards.straightdope.com/u/Debaser)\ **Post date:** [October 28, 2005, 8:39pm UTC](https://boards.straightdope.com/t/effects-of-bushs-tax-cuts/328326/41 "2005-10-28T20:39:33Z")
> [@BrainGlutton](#): > > Cite, please? You want a cite that lower taxes stimulate the economy? Ok. I’ll get back to you. > [@](#): > > And please tell us under what circumstances it would be appropriate, and not recession-inducing, to **raise** taxes. Answer: When taxes are too low, of course! But, any raise in taxes is always going to be “recession-inducing” in the sense that it will be harmful to the economy. However, it’s like turning on a hose pointing into the ocean. It raises the level of the water, but that doesn’t matter if the tide is going out. If the economy is picking up steam for a period of growth, increasing taxes might curb it some, but certainly won’t stop it. Just like cutting taxes won’t stop a recession, raising them won’t stop a growth period. ---
**Author:** ![Kimstu](https://avatars.discourse-cdn.com/v4/letter/k/ecd19e/32.png) [@Kimstu](https://boards.straightdope.com/u/Kimstu)\ **Post date:** [October 28, 2005, 8:39pm UTC](https://boards.straightdope.com/t/effects-of-bushs-tax-cuts/328326/42 "2005-10-28T20:39:51Z")
> [@Debaser](#): > > Of course people that already basically don’t pay income taxes won’t benefit from a cut in income taxes. > [@Kimstu](#): > > In other words, most people won’t experience any significant “money in their pockets” effect from the Bush tax cuts. > [@Debaser](#): > > Not true. Even people who don’t pay taxes at all got rebate checks, for instance. I see. Would you please make up your mind? > [@Debaser](#): > > Do you have a date for those numbers? Yes. It’s in the [FactCheck.org article](http://www.factcheck.org/article.aspx?docID=145) that I’ve referenced twice and linked to once. (By now, three times and twice, respectively.) Sorry **Debaser** , but just now you don’t seem to be reading & thinking very carefully before posting! ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [October 28, 2005, 8:43pm UTC](https://boards.straightdope.com/t/effects-of-bushs-tax-cuts/328326/43 "2005-10-28T20:43:24Z")
> [@Debaser](#): > > Because you’ve already paid taxes on them, and paying more taxes on these things cripples the economy. People don’t sell their houses if they know they’ll take a huge hit on capital gains. They pay plenty of taxes already. They shouldn’t get slammed with tens or hundreds of thousands more just for selling their home and retiring to Florida. Even 20 years ago everyone got one capital gains exemption from selling a house. I believe that things are much better now. When is the last time someone got slammed by selling a house and moving to Florida? A table [here](http://en.wikipedia.org/wiki/Inheritance_tax) shows that for real cases, ( a study of 440 estates) no one paid more than 23% on average, and the average rate for estates up to $3.5 million was 7.9%. So, yes, only the rich will benefit in any significant way from an estate tax repeal. As for the benefits of the tax cut, the debate was not about whether a cut was a good idea, but how to distribute it for maximum benefit. It is unlikely that structuring a cut so the rich get as big a piece as they did increases consumer spending as much as if it were targeted more towards the middle class. The official recession was short, true, but the recovery was very weak, especially in terms of employment. ---
**Author:** ![NurseCarmen](https://avatars.discourse-cdn.com/v4/letter/n/5daacb/32.png) [@NurseCarmen](https://boards.straightdope.com/u/NurseCarmen)\ **Post date:** [October 28, 2005, 8:48pm UTC](https://boards.straightdope.com/t/effects-of-bushs-tax-cuts/328326/44 "2005-10-28T20:48:20Z")
> [@Debaser](#): > > I’ve said over and over already that conservatives want small government and less taxes. It’s a part of what we believe. It’s better for lots of reasons. That it helps the economy is only one of them. But we seem to have less taxes and more government. What is that helping? ---
**Author:** ![Debaser](https://avatars.discourse-cdn.com/v4/letter/d/3da27b/32.png) [@Debaser](https://boards.straightdope.com/u/Debaser)\ **Post date:** [October 28, 2005, 8:50pm UTC](https://boards.straightdope.com/t/effects-of-bushs-tax-cuts/328326/45 "2005-10-28T20:50:11Z")
[cite](http://www.moneychimp.com/articles/econ/tax_cuts.htm) > [@](#): > > During recessions, the government will occasionally offer a tax cut as an economic stimulus. In rough terms, a tax cut of one trillion dollars over ten years will “give back” an amount equal to about one percent of consumer spending annually over that period. > > The first question about tax cuts is, exactly how do they stimulate the economy? This is not a stupid question! Remember, if the government gives us a tax cut they’ll still have to make up the budget shortfall somehow, chiefly by selling more bonds to American citizens (who happen to be the same people getting the tax cut) or foreigners (who will raise the money by selling us more of their goods and services, or buying less of ours). In other words, government spending will keep sucking money out of the private sector, only the payment method will be different. > > Yet most economists seem to agree that tax cuts really do provide a stimulus. The real reason may be that they provide flexibility: people who want to consume more can use their tax cut for that purpose; people who want to save more can use theirs to buy up the new government bonds. This is the perfect scenario during a recession, when prior over-investment has resulted in bloated inventory levels and poor private investment opportunities. Even states run by liberals like here in Massachusetts we have sales tax holidays specifically to stimulate the economy. ---
**Author:** ![jshore](https://avatars.discourse-cdn.com/v4/letter/j/b5e925/32.png) [@jshore](https://boards.straightdope.com/u/jshore)\ **Post date:** [October 28, 2005, 8:51pm UTC](https://boards.straightdope.com/t/effects-of-bushs-tax-cuts/328326/46 "2005-10-28T20:51:43Z")
> [@Debaser](#): > > The middle class definitely benefits from cuts to capital gains, estate taxes and dividend taxes. But the rich benefit **disproportionately**. And, the middle class only benefits in the end if you believe that you benefit if I take a cash advance from your credit card, give most of it to my rich friends and then give a little bit to you. In other words, there ain’t a pot of free money lying around…so just cutting taxes basically amounts to a loan (assuming spending is not cut proportionally). > [@](#): > > Not only rich people leave estates, unless you count 1.5 million as “rich”. Look, the exemption was something like 1.3 million dollars for a couple **before** Bush began the gradual phase-out of the estate tax. And, factually speaking, it applied to only a few percent of estates left each year (although due to accounting gimics, the phase-out sunsets right now the year after it is complete)…so, yes, it was basically a tax on the rich. Besides which, there was bipartisan agreement to raise the phase-out somewhat…just not to completely get rid of the tax. > [@](#): > > But the income tax cuts were. (To everyone that actually pays income tax that is.) That’s what I was referring to. As I’ve already stated multiple times: Yes, rich people make out good when you cut just about any taxes, since they pay so much more in taxes to begin with. That is simply not factually correct. The tax cuts reduced the **total** federal tax burden on the rich by a **higher percentage** than the total federal tax burden on the middle class and the poor. If you look at the total overall tax burden (federal, state, and local), the cuts are even more regressive. This is in part because the federal income tax is the most progressive federal tax we have whereas others such as the payroll taxes are regressive. > [@](#): > > You’d do yourself a favor if you tried to understand that conservatives just don’t like taxes. That’s it. It’s really not a conspiracy to hurt the poor. Lower taxes on everyone, rich and poor is what’s best for all. I know you can’t agree with that because of your beliefs. Well, I don’t know about motivations but the fact is, as I have stated above, that the tax system has become more regressive under Bush. It is as simple as that. To the extent that people in the middle class haven’t seen their federal tax cuts gobbled up by state and local taxes, it is only because we are going deeper and deeper into debt. ---
**Author:** ![Debaser](https://avatars.discourse-cdn.com/v4/letter/d/3da27b/32.png) [@Debaser](https://boards.straightdope.com/u/Debaser)\ **Post date:** [October 28, 2005, 8:56pm UTC](https://boards.straightdope.com/t/effects-of-bushs-tax-cuts/328326/47 "2005-10-28T20:56:35Z")
> [@Kimstu](#): > > I see. Would you please make up your mind? I’ve been consistent. Everyone benefits from the cuts. The rich benefit more because they pay more. If you look at my first quote there in context it’s clear what I meant. > [@](#): > > Yes. It’s in the [FactCheck.org article](http://www.factcheck.org/article.aspx?docID=145) that I’ve referenced twice and linked to once. (By now, three times and twice, respectively.) In post #30 you described how to get to the page where you pulled the numbers from. I went to factcheck and couldn’t find them. The link to “tax policy center” doesn’t work for me. Rather than continue to investigate where you got them, I simply asked you for the dates. > [@](#): > > Sorry **Debaser** , but just now you don’t seem to be reading & thinking very carefully before posting! I don’t have time to research your cites for you. 😃 I’m busy trying to respond to everyone. (You know what comes next if I can’t keep up, right? All the indignation and huffing about how I’m ignoring people’s arguments.) ---
**Author:** ![jshore](https://avatars.discourse-cdn.com/v4/letter/j/b5e925/32.png) [@jshore](https://boards.straightdope.com/u/jshore)\ **Post date:** [October 28, 2005, 9:02pm UTC](https://boards.straightdope.com/t/effects-of-bushs-tax-cuts/328326/48 "2005-10-28T21:02:52Z")
> [@jshore](#): > > This is in part because the federal income tax is the most progressive federal tax we have whereas others such as the payroll taxes are regressive. More correctly, it is the biggest of the progressive taxes. The estate tax, for example, is more progressive but a smaller player…and, at any rate, Bush eliminated that too. > [@Debaser](#): > > Even states run by liberals like here in Massachusetts we have sales tax holidays specifically to stimulate the economy. If they are smart, they do it by cutting taxes in a way that puts most of the money in the pockets of the poor and middle class who then go out and spend it. If they are stupid (or really are doing the cuts for other than their stated reason), then they do it in a way that puts most of the money in the pockets of the wealthy. No doubt, the tax cut did have some short-to-medium term stimulus effects. However, it was about the least bang for the most buck that you could possibly imagine. I think that even if you believed the administration’s own figures for how many jobs it was supposed to create, it worked out to be extremely pricey on a per-job basis. (And, there is no reason to believe that the administration’s job creation numbers turned out to be correct given the general anemic growth in the job market.) Of course, it is not surprising that the cuts were lousy for stimulus since that is not what they were even originally designed for. As you might recall, the original motivation for Bush’s tax cut plan was to give the surplus back to the people; it only became a stimulus plan after the economy began to tank. Like the Iraq War, the administration’s plan on the tax cuts was to decide what they wanted to do first and then come up with lame justifications second. ---
**Author:** ![UncleBeer](https://avatars.discourse-cdn.com/v4/letter/u/977dab/32.png) [@UncleBeer](https://boards.straightdope.com/u/UncleBeer)\ **Post date:** [October 28, 2005, 9:04pm UTC](https://boards.straightdope.com/t/effects-of-bushs-tax-cuts/328326/49 "2005-10-28T21:04:01Z")
> [@Jackknifed Juggernaut](#): > > A counter-argument is that tax breaks for the wealthy lead to re-investment. This is the supply side argument: Wealthy individuals take their excess cash and invest in new projects providing for longer term growth. This leads to more jobs, which leads to more money for everyone. This is the biggest scam of an idea in recent US economic history. Only partisan hacks convince themselves of this, and there is absolutely no evidence that this occurs. In reality, the wealthy will always invest in good projects with solid financial returns. And projects with solid financial returns are dependent on a society that can afford to purchase the new thing that is being sold. Well, not to play the partisan hack, but if the rich folks are getting such a big tax break (and Kimstu’s table from [factcheck.org](http://factcheck.org) seems to indicate that is true - to the tune of $112,925), then what’re they doing with that money? Even if they’re just buying trout fur parkas, instead of investing it, they’re stimulating the economy. At least that’s an argument being made by the naysayers of trickle-down here - spending is good, particularly spending that isn’t financed by credit. > [@NurseCarmen](#): > > But we seem to have less taxes and more government. What is that helping? Keynesianism. ---
**Author:** ![Debaser](https://avatars.discourse-cdn.com/v4/letter/d/3da27b/32.png) [@Debaser](https://boards.straightdope.com/u/Debaser)\ **Post date:** [October 28, 2005, 9:07pm UTC](https://boards.straightdope.com/t/effects-of-bushs-tax-cuts/328326/50 "2005-10-28T21:07:29Z")
> [@NurseCarmen](#): > > But we seem to have less taxes and more government. What is that helping? > [@jshore](#): > > In other words, there ain’t a pot of free money lying around…so just cutting taxes basically amounts to a loan (assuming spending is not cut proportionally). I’d be all for cutting spending to go along with the tax cuts, folks! I’ve posted that a couple times already that I’m dismayed over this. I’m not defending Bush’s spending. I really thought that he’d be more conservative fiscally in his second term. (Once he no longer had to worry about re-election he could have been more aggressive in cutting social programs.) He let me down, and I’m pissed about it. Now, would you all stop beating up on me about this. Please? I’ll tell you what: The next person who beats me over the head about how Bush is spending too much as if it’s in response to me arguing the contrary I’ll just go ahead and carve Bush spends too much! on my chest with a rusty meat cleaver, take a web cam pick and post it on the internet as I bleed out and lose consciousness. Fair? ---
**Author:** ![NurseCarmen](https://avatars.discourse-cdn.com/v4/letter/n/5daacb/32.png) [@NurseCarmen](https://boards.straightdope.com/u/NurseCarmen)\ **Post date:** [October 28, 2005, 9:16pm UTC](https://boards.straightdope.com/t/effects-of-bushs-tax-cuts/328326/51 "2005-10-28T21:16:17Z")
But Debaser, Bush is spending too much! 😃 ---
**Author:** ![Kimstu](https://avatars.discourse-cdn.com/v4/letter/k/ecd19e/32.png) [@Kimstu](https://boards.straightdope.com/u/Kimstu)\ **Post date:** [October 28, 2005, 9:17pm UTC](https://boards.straightdope.com/t/effects-of-bushs-tax-cuts/328326/52 "2005-10-28T21:17:55Z")
> [@UncleBeer](#): > > but if the rich folks are getting such a big tax break (and Kimstu’s table from [factcheck.org](http://factcheck.org) seems to indicate that is true - to the tune of $112,925), then what’re they doing with that money? Even if they’re just buying trout fur parkas, instead of investing it, they’re stimulating the economy. Somewhat, sure. The question is, are they stimulating the economy more effectively than lower-income spenders would? And are they more likely than lower-income people to invest or shelter their tax breaks overseas in somebody else’s economy? > [@Debaser](#): > > Now, would you all stop beating up on me about this. Please? There there there, sorry if we’ve been snappish (me, at least). But the point is that the question of deficits **does** have a big impact on how we answer the OP’s question of what the effects of the Bush tax cuts have been. We’re not trying to accuse you personally of being a borrow-and-spend Republican. ---
**Author:** ![NurseCarmen](https://avatars.discourse-cdn.com/v4/letter/n/5daacb/32.png) [@NurseCarmen](https://boards.straightdope.com/u/NurseCarmen)\ **Post date:** [October 28, 2005, 9:24pm UTC](https://boards.straightdope.com/t/effects-of-bushs-tax-cuts/328326/53 "2005-10-28T21:24:48Z")
Well, back to the topic then. Tax cuts during a recession are good. Every sane person agrees on this. Some tax cuts are in a better position to jump start an economy. The taxes Bush chose to cut weren’t necessarily the best taxes to cut if his true purpose was to jump start the economy. While most everyone saw some semblance of a tax cut, the wealthiest saw the most benefit. And the middle class generally saw their state and local taxes increase due to the nature of squeezing a water balloon. While the wealthies one percent also saw some state increases, it was non in line with their cuts. The Republican position of less government is an honerable and truly defensable position. Bush’s position is not the Republican position. That sum it up? ---
**Author:** ![Jackknifed\_Juggernaut](https://avatars.discourse-cdn.com/v4/letter/j/9de053/32.png) [@Jackknifed\_Juggernaut](https://boards.straightdope.com/u/Jackknifed_Juggernaut)\ **Post date:** [October 28, 2005, 9:46pm UTC](https://boards.straightdope.com/t/effects-of-bushs-tax-cuts/328326/54 "2005-10-28T21:46:37Z")
> [@UncleBeer](#): > > Well, not to play the partisan hack, but if the rich folks are getting such a big tax break (and Kimstu’s table from [factcheck.org](http://factcheck.org) seems to indicate that is true - to the tune of $112,925), then what’re they doing with that money? Good question. They’re either spending it or saving it. This is measured by the MPC or marginal propensity to consume, which I believe is something like 96% in the US. This means that Americans spend 96 cents on every incremental dollar we earn. But our spending it is equivalent to the government spending it. Thus, the government could have stimulated the economy on its own by spending an equivalent amount. I believe that the term “boondoggle” comes from the government paying “workers” to dig holes and then fill them in during the Depression just to stimulate the economy. Saving the money can help the long-term economy by providing more funds to lend and driving down interest rates and leading to real investment. Of course, this is equivalent to the government saving money by not spending it. Investing is a term that means 2 things. Investing in stocks, bonds or real estate does not add any value to the economy. It simply inflates the value of these investments. Only investing in new businesses (or current companies investing in new capital) adds real value. Thus, the real estate bubble is not a good sign of the economy because it shows us that people don’t have many new businesses in which to invest, and must put their capital in safe assets. A $150K house that is now a $500K house is still, well, the same house. I apologize if this post is not clear, but I’ve got to catch a train. ---
**Author:** ![jshore](https://avatars.discourse-cdn.com/v4/letter/j/b5e925/32.png) [@jshore](https://boards.straightdope.com/u/jshore)\ **Post date:** [October 28, 2005, 11:30pm UTC](https://boards.straightdope.com/t/effects-of-bushs-tax-cuts/328326/55 "2005-10-28T23:30:05Z")
> [@Debaser](#): > > I’d be all for cutting spending to go along with the tax cuts, folks! I’ve posted that a couple times already that I’m dismayed over this. I’m not defending Bush’s spending. I really thought that he’d be more conservative fiscally in his second term. (Once he no longer had to worry about re-election he could have been more aggressive in cutting social programs.) He let me down, and I’m pissed about it. > > Now, would you all stop beating up on me about this. Please? But the point is that the issue of how the tax cuts will eventually be paid for has everything to do with the issue of fairness of them…i.e., who benefitted, if at all. As I made clear with my analogy to a credit card, it makes little sense to conclude that everyone magically benefits from a tax cut without considering where the money is coming from…what is going to be cut spending-wise or where the money is eventually going to come from to pay down the deficits. So, the fact that the rich **disproportionately benefitted** in what is not exactly a zero-sum game but is closer to that than the alternative view is very relevant to understanding what has actually happened. I mean if everyone unambiguously benefitted when taxes were cut then who would oppose them? ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [October 28, 2005, 11:44pm UTC](https://boards.straightdope.com/t/effects-of-bushs-tax-cuts/328326/56 "2005-10-28T23:44:01Z")
> [@Jackknifed Juggernaut](#): > > Good question. They’re either spending it or saving it. This is measured by the MPC or marginal propensity to consume, which I believe is something like 96% in the US. I suspect this number is much lower for the income levels in question. I know it is for me. > [@](#): > > Investing is a term that means 2 things. Investing in stocks, bonds or real estate does not add any value to the economy. It simply inflates the value of these investments. Only investing in new businesses (or current companies investing in new capital) adds real value. Thus, the real estate bubble is not a good sign of the economy because it shows us that people don’t have many new businesses in which to invest, and must put their capital in safe assets. A $150K house that is now a $500K house is still, well, the same house. And a stock priced at 50 times earnings instead of 10 because of overinvestment in the market is still the same stock. The big problem with the benefit of the tax cuts to increase investment is that when they were done, there was tremendous overcapacity. A lot of companies were left with billions of dollars of inventory, the telecoms built out for demand that was not going to come for ages. At this time increased investment was the last thing we needed, increased consumption would have been far more useful. If the tax cuts had been targeted lower, there would likely be more investment, more employment, and maybe more of a tax base. It was just terrible economic policy. ---
**Author:** ![Oslo\_Ostragoth](https://avatars.discourse-cdn.com/v4/letter/o/a9a28c/32.png) [@Oslo\_Ostragoth](https://boards.straightdope.com/u/Oslo_Ostragoth)\ **Post date:** [October 30, 2005, 6:07pm UTC](https://boards.straightdope.com/t/effects-of-bushs-tax-cuts/328326/57 "2005-10-30T18:07:31Z")
> [@BrainGlutton](#): > > What effect have the Bush tax cuts had so far on the U.S. economy/deficit/goverenment effectiveness/things in general? I read an article that said that, after the 2003 cuts, federal tax revenue grew by $14 billion a month. Sorry, I don’t have a cite. As to the overall effect, I think it’s just wrong to put “government” and “effectiveness” in the same sentence. ---
**Author:** ![SteveG1](https://avatars.discourse-cdn.com/v4/letter/s/bb73d2/32.png) [@SteveG1](https://boards.straightdope.com/u/SteveG1)\ **Post date:** [October 30, 2005, 6:36pm UTC](https://boards.straightdope.com/t/effects-of-bushs-tax-cuts/328326/58 "2005-10-30T18:36:10Z")
> [@The Brookings Institute](#): > > [http://www.brookings.edu/comm/policybriefs/pb101.htm](http://www.brookings.edu/comm/policybriefs/pb101.htm) > Our findings suggest that EGTRRA will reduce the size of the future economy, raise interest rates, make taxes more regressive, increase tax complexity, and prove fiscally unsustainable. … > These findings show that tax cuts are not simply a matter of returning unneeded or unused funds to taxpayers, but rather a choice to require other, future taxpayers to cover the long-term deficit, which the tax cut significantly exacerbates. The fiscal gap and the expansion of that gap by EGTRRA implies either that taxes will rise or spending will fall in the future. … > EGTRRA, in contrast, raises after-tax income by 6.3 percent for households in the top 1 percent of the income distribution, compared to 2.8 percent or less for other groups, and less than 1 percent for the bottom quintile (see table 1). EGTRRA, then, will make the distribution of after-tax income less equal. … > Treasury data show that a surprisingly large share of households receive no reduction in marginal tax rates, including 72 percent of those who file tax returns and 64 percent of all filers who actually pay positive amounts of income tax. … > Conclusion > > Our findings, based on recent economic research, are stark. We find that EGTRRA was fiscally unsustainable even before the economic downturn and the September 11 terrorist attacks slowed the economy. We estimate that the tax cut will not raise long-term growth, but it will raise burdens on future generations. EGTRRA will also raise interest rates. > [@Robert Freedman](#): > > [http://www.counterpunch.org/freeman05302003.html](http://www.counterpunch.org/freeman05302003.html) > Remember Ronald Reagan and Supply Side Economics? In the early 1980s, Reagan promised the nation that if we lowered tax rates on the wealthy, the economy would grow so much the federal budget would be balanced “within three years, maybe even two.” > > Sober people were skeptical-and rightly so. Reagan’s Republican opponent for the 1980 presidential election, George H.W. Bush called it “voodoo economics.” His own Budget Director, David Stockman, called it a “Trojan horse,” a scam intended really to funnel more money to the already rich. Stockman was quickly dismissed. > > The results, we now know, were a disaster. > [@The Brookings Institute](#): > > Peter R. Orszag, a senior fellow in economics at the Brookings Institution, said the document “gives a misleading impression of the overall effect of the tax cuts.” Just 27 million of the nation’s roughly 140 million households consist of married couples with children, he said. Brookings figures show that under the most recent law, 81 percent of households would save $1,000 or less. > [@Newsweek](#): > > [http://msnbc.msn.com/id/4660655](http://msnbc.msn.com/id/4660655) > Bush has been open about each item he wants: lowering taxes on capital income, such as dividends and capital gains; creating two big new income-sheltering investment plans; eliminating the estate tax. But he’s not been at all forthcoming about the ultimate effect of his program. If Bush gets what he wants, the income tax will become a misnomer it will really be a salary tax. Almost all income taxes would come from paychecks 80 percent of income for most families, less than half for the top 1 percent. Meanwhile taxpayers receiving dividends, interest and capital gains, known collectively as investment income, would have a much lighter burden than salary earners or maybe none at all. > > By drastically favoring investment income over salary, fees and other “earned income,” Bush would make it harder for people who start out with nothing to earn their way up the economic ladder, because they’d pay full taxes on almost everything they make, but he’d shower rewards on people who have already made it to the top rungs. Like I said before, I didn’t notice any increase in my paycheck, and apparently I was not supposed to. In another article whcih I can’t fidn right now, there may be an increase in property taxes for home owners somewhere in the mix too. ---
**Author:** ![jshore](https://avatars.discourse-cdn.com/v4/letter/j/b5e925/32.png) [@jshore](https://boards.straightdope.com/u/jshore)\ **Post date:** [October 30, 2005, 8:07pm UTC](https://boards.straightdope.com/t/effects-of-bushs-tax-cuts/328326/59 "2005-10-30T20:07:58Z")
> [@Oslo Ostragoth](#): > > I read an article that said that, after the 2003 cuts, federal tax revenue grew by $14 billion a month. Sorry, I don’t have a cite. Unfortunately, this sort of thing is kind of useless without a cite. It is true that the federal tax revenues have been recovering somewhat recently…but that is after hitting record lows (as a percent of GDP). [Here](http://www.cbpp.org/4-14-04tax-sum.htm) is a report from April 2004: > [@](#): > > The Bush tax cuts have contributed to revenues dropping in 2004 to the lowest level as a share of the economy since 1950, and have been a major contributor to the dramatic shift from large projected budget surpluses to projected deficits as far as the eye can see. ---
**Author:** ![mazinger\_z](https://avatars.discourse-cdn.com/v4/letter/m/5f9b8f/32.png) [@mazinger\_z](https://boards.straightdope.com/u/mazinger_z)\ **Post date:** [October 31, 2005, 6:19pm UTC](https://boards.straightdope.com/t/effects-of-bushs-tax-cuts/328326/60 "2005-10-31T18:19:46Z")
> [@Jackknifed Juggernaut](#): > > Tax cuts MAY stimulate the economy, but only temporarily. Well, really only until a new equilibrium is formed. > [@Jackknifed Juggernaut](#): > > Of course, in lieu of these tax cuts, the government could just keep the taxes and spend the the money itself. This yields the exact same effect on the economy: it drives up government spending, which is also a component of GDP. No real difference, except that a GOOD government will spend the money more efficiently (due to its size) and for the betterment of the society, versus an individual spending only on himself. Not exactly true. This is true if the government spends in for the public: infrastructure, military, parks, things are easily commoditized; education is debatable. If the government spends in the private market, this will only lead to inflation. > [@Jackknifed Juggernaut](#): > > It is up to citizens to vote for a government that will spend money wisely; i.e. education, healthcare, infrastructure, etc. This leads to a higher standard of living for everyone. When a citizen votes for a government for the purpose of helping only himself, we get corrupt governments that are more interested in paying back their constituencies through selective tax cuts. [off-topic]I find the logic of this statement to be suspect. Elected officials will always do what the electorate wanted them to do when they (the electorate) voted them in the first place. Also, most of the world/people in this country is less wealthy compared to the “rich” (those who are supposedly reaping too much benefit). The majority of voters should easily out vote the rich for their own self-interest. > [@Jackknifed Juggernaut](#): > > A counter-argument is that tax breaks for the wealthy lead to re-investment. This is the supply side argument: Wealthy individuals take their excess cash and invest in new projects providing for longer term growth. I’m not as up to date on my supply-side theory, but in theory, this is the simplest way to look at it. Another way to state it, one which I’m more comfortable with stating is: Tax cuts increase GDP growth, all other factors remaining equal. **To the OP:** The direct effect of Bush tax cuts is to raise GDP, i.e. raise the economy out of recession. Bush’s tax cuts, while across the board, gave back more nominal dollars to the rich (but, then, they pay more/continue to pay more of the total tax burden.) Also, rather than say that the taxes are more regressive (which is true, depending on your context), it is more apt to say that the tax cuts made the overall tax structure flatter. Following this, another direct effect will be to increase wealth inequality. Whether that is good or bad is debatable. [Previous page](https://boards.straightdope.com/t/effects-of-bushs-tax-cuts/328326.md?page=2) [Next page](https://boards.straightdope.com/t/effects-of-bushs-tax-cuts/328326.md?page=4)