Hillary's Surprising Top Priority: the Bush Tax Cuts

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You have it right

In 2001, the Democrats forced Bush to split his tax cut plan into two parts, reducing the bottom rates in 2001 and delaying most of the upper end tax cuts (including the capital gains cuts) for 2003. The Democrats claim these tax cuts were irresponsibly costly, but don't want to repeal the 2001 cuts. However those cuts were scored at about 4 times the cost of the 2003 cuts. I recall that the 2001 cuts were scored at about $1.6 trillion over 10 years. The 2003 cuts were scored at about $400 billion over 10 years. Pundits used the similarity between that $400 billion figure and the budget deficit numbers to draw a link between the two, conveniently forgetting that the 2003 tax cut scoring was a ten year figure.

So 80% of the statically-scored cost of the Bush tax cuts came from the 2001 cuts. And arguably, the static scoring is at its worst when looking at the tax cuts for the upper incomes because the rich spend far less of the cuts on personal consumption and spend far more on economically productive activities that will make them (and others) even richer (and thus required to pay more taxes) later on.

If we really want to go back to the tax structure under Clinton, to recover all that revenue, it will involve raising the taxes in the bottom bracket by 50% (from 10% to 15% of marginal income) while raising taxes on the upper incomes by only 13% (from 35% to 39.6%). You can see how progressive the Bush tax cuts really were, in total, by noticing how regressive their total repeal would be. To put it another way, the ratio of the top to bottom tax rate was 2.64 in 2000, but increased to 3.5 after the Bush cuts. Much flatter under Clinton, with more of the burden under Clinton falling on the middle class. That's why to get the revenue back, you have to repeal the 2001 cuts.

Mazzula of VA @ Jan 08, 2008 09:56:20 AM

Bush bias

If this writer thinks the Bush tax cuts were for the middle class it must be puzzling to the rich!

Mac McCutcheon of FL @ Dec 31, 2007 16:54:01 PM

tHOUGHTS ON LADY HILLARY

I don't trust Lady Hillary and never will. She is "just a wild

socialist " at heart and will never change.

George Corlas of CA @ Dec 31, 2007 13:28:20 PM

editorial comment, economy, politics

US News should get another managing editor if you cannot understand the intended effects of middle class tax cuts (and other means of assistance) and can only grasp tax cuts for the wealthy. There would be not be any negative effects of expired tax cuts for the wealthy. Their income is already above their needs of consumption, therefore the rest must be saved or invested. Futhermore, this country does its best when the middle class flourishes.

Matt Staccone of NY @ Dec 31, 2007 13:10:52 PM

cognitive dissonance

It seems that you are unaware of the actual meaning of "cognitive dissonance."

This youtube vid takes a few minutes, but explains this quite well.

http://www.youtube.com/watch?v=SA1f2MefsMM

Holly of PA @ Dec 28, 2007 14:51:39 PM