Politics

Extending Bush Tax Cuts for the Wealthy Is No Economic Plan

By Office of the Speaker

A meaningful plan to strengthen our economy will lower health care and energy costs, bolster the housing market, provide middle-class tax relief, provide tax incentives that create new American jobs, strengthen education for a new generation of skilled workers, strengthen American infrastructure, restore fiscal responsibility, and increase American innovation to transform our economy.

The New Direction Congress is working to make the tax code fair and pro-family. The House has passed a budget that makes middle-class tax relief a priority– calling for extending middle-income tax cuts, including the child tax credit, marriage penalty relief, and the 10 percent tax bracket. This Congress has also fought to protect middle-income Americans from being hit by the Alternative Minimum Tax

Re-enacting tax breaks for multi-millionaires which expire three years from now is not an economic plan for our current economic downturn or America?s future and is not fiscally sustainable. Federal Reserve Chairman Ben Bernanke cautioned in January against actions that would increase our deficit over the long term, hurting our ability to tackle long-term challenges.

Bush Tax Cuts Disproportionately Help the Wealthy

· In 2007, the average millionaire received $120,000 thanks to the Bush tax cuts, while middle-income taxpayers received an average of $740. In 2010, when tax cuts are fully in effect, that will grow to a $158,000 tax cut for millionaires, while middle-income taxpayers will receive an average of $810. [CBPP, 3/10/08]

· The cost of the tax cuts going to the top 1 percent of households is larger than the budget of the Education Department. By 2010 ? the first year that all the 2001 and 2003 tax cuts are fully in effect ? households in the top 1 percent will receive average tax cuts of more than $60,000 each. [CBPP, 3/28/08]

· Making the Bush tax cuts permanent would provide the top 1 percent of households (i.e. households with annual income above $450,000 in 2008) with nearly one-third of the total dollars? almost $1.2 trillion over the next ten years. Families making $1 million or more would get an average tax cut of $162,000 in FY 2012. [CBPP, 3/28/08]

· The Bush tax cuts largely favor the wealthy because they cut the tax rate for capital gains and dividends to 15 percent ? less than half the top tax rate on wages and salaries. In 2005, the taxpayers with adjusted gross incomes over $10 million (0.01 percent of all filers) received 28 percent of the tax savings from the special tax rates on capital gains and dividends. Their average tax break was more than $1.8 million. [CTJ, 8/10/07]

· The Bush tax cuts are widening the income gap, increasing the after-tax income of those making $1 million by over 7 percent — more than three times that of middle-income taxpayers (2 percent) — once fully in effect. [CBPP, 3/10/08]

Bush Tax Cuts Increase Federal Debt

· Making the Bush tax cuts permanent (including interest costs and extending AMT relief) would add $4.4 trillion to the federal deficit over the next 10 years. [CBPP, 3/28/08]

· The single largest contributor to the increase in the projected long-term deficits has been the Bush tax cuts, amounting to more than half (51 percent) of the $2.3 trillion that has been added by legislation to the deficits between 2001 to 2006. [CBPP, 11/16/07]

Full post as published by The Gavel on April 14, 2008 (boomark / email).