Tuesday, February 06, 2007

Myths about the Bush Tax Cuts

The conservative Heritage Foundation takes on myths about the administration's tax cuts in a piece titled Ten Myths About the Bush Tax Cuts. While you should read the whole article, here's a sampling to whet your appetite:

MYTH: Tax revenues remain low.
FACT: Tax revenues are above the historical average, even after the tax cuts.

Tax revenues were 18.4% of GDP, much higher than the 20-, 40- and 60-year averages. We're getting enough in taxes ... deficits are because spending is out of control. And the spending we need to be concerned about isn't just defense spending, it's mostly entitlement spending. Here's another chart from Heritage Foundation, from a different source.

MYTH: 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.

In fact, 90% of the deficit is attributable to spending increases. Take that, John Edwards and other tax-increase craving liberals!

MYTH: 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.

Here's another version of the entitlement chart, but showing how little tax cuts matter in the deficit picture:

Oh, and save the best for last ...

MYTH: The Bush tax cuts were tilted toward the rich.
FACT: The rich are now shouldering even more of the income tax burden.

I have complained previously that the rich pay a disproportionate amount of their income in taxes, but turns out the tax cuts have actually exaggerated that further (never have guessed from the populist rhetoric, would you?) For the record, I'm one of the impoverished taxpayers who contributes relatively little to the Federal revenue stream.

So the next time a populist politician like John Edwards or John Kerry tells you that the tax cuts helped only the top 1%, tell them you're too smart to be fooled by their dishonest propaganda!

1 comment:

sidkrisha said...

Karthik -
Where are you getting all this data from? Can you explain the first chart again? What about historic tax rates relative to GDP? Wouldn't that be the way to truly judge if we've had "tax-cuts", as opposed to vhecking the forecast for the next 60 years? Well, either way, it's Bush's crazy spending agenda that has got us into this mess.