Today marks the 10-year anniversary of the President Bush‘s tax cuts, which were signed into law as a response to the leftover Clinton-era surplus. With their heavy cuts to capital gains, investment income, and estate taxes, the Bush tax cuts were weighted toward high-income earners, with the top 0.1 percent of taxpayers receiving an average tax cut of $520,000. From 2001 through 2010, according to the Economic Policy Institute, the Bush tax cuts added $2.6 trillion to the public debt and are responsible for nearly 50 percent of the total debt accumulated during this period. And far from jump-starting the economy, the Bush tax cuts did nothing to boost economic growth, yielding an economic expansion characterized by the worst wage, salary, and job growth since the end of World War II.
Because of President Obama‘s tax deal last December, the Bush tax cuts are scheduled to expire next year, and given their huge role in driving short- and long-term deficits, full expiration would dramatically increase revenues and stabilize the debt load for the next decade. But what happens if Congress renews the Bush tax cuts, as is required by the budget passed by House Republicans? Here is a chart from Citizens for Tax Justice, showing the full impact of extending the Bush tax cuts for 2013:
According to CTJ, an extension would deliver an average tax cut of $514,786 to the top 5 percent of income earners, or more than 17 times the cut received by the bottom 60 percent, and more than 115 times the cut received by middle-income families. A permanent extension would almost double the budget deficit in the short term and cost the government $4.6 trillion over the next decade. If allowed to continue, as the Economic Policy Institute points out, the Bush tax cuts would crowd out investments in economic security, education, infrastructure, research, and health care. In other words, the Bush tax cuts were a terrible idea, and they need to end.
