Expiring Bush tax cuts are front and center for upcoming election
The Bush era tax cuts that disproportionately benefit top wage earners, which are scheduled to expire at the end of the year, are a central issue in this year’s presidential election just as they were in the 2008 and in the 2010 midterm elections.
According to the Tax Policy Center, only 23.4 percent of all tax payers receive these tax cuts, and the top 20 percent of wage earners receive 89.5 percent of the tax cuts. That percentage gets drastically smaller for each of the lower quintiles and the bottom 20 percent receives no tax cuts at all.
The cuts, scheduled for expiration at the end of 2010, initiated a fight but were saved at the last minute in a deal that President Obama struck with congressional Republicans to extend unemployment benefits. The end result was wealthier Americans got a two year extension of tax cuts they didn’t need while out-of-work Americans only got a thirteen month extension of unemployment benefits.
Republican
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"I support the Bush tax cuts. The Bush tax cuts helped get our economy going again when we faced the last tough times. That's why right now, as we face tough times, we need to have somebody who understands, has the private sector, the business world, the economy in their DNA. I do. I spent my life in the private sector. I know how jobs come & how they go, and I'll make sure that we create more good jobs for this nation. One way to do that is by holding down taxes & making those tax cuts permanent." —Mitt Romney |
"In December, I agreed to extend the tax cuts for the wealthiest Americans because it was the only way I could prevent a tax hike on middle-class Americans. But we cannot afford $1 trillion worth of tax cuts for every millionaire and billionaire in our society. We can't afford it. And I refuse to renew them again." "Instead of doing what's right for middle-class families and small business owners, Republicans in Congress are holding these tax cuts hostage until we extend tax cuts for the wealthiest Americans." —Barack Obama |
Democrat
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Those in favor of these tax cuts argue that putting more money in the pockets of wealthier Americans will create jobs. However, a look at job growth during the Bush administration casts doubt on the top heavy tax cuts.
While Bush did get a 7 percent job growth, according to Forbes Magazine’s Rick Ungar, every other two term president since Lyndon Johnson saw double digit job growth without the aid of such massive tax cuts. According to Politifact.com, the greatest job growth since 1960 came during the Clinton administration in the wake of a significant tax increase.
According to Tax Policy Center research, even if the tax cuts had created the expected economic growth, at least 60 percent of households would have been worse off than they were before the tax cuts were initiated.
The TPC also shows that the Bush tax cuts represent an estimated $7.7 trillion dollar loss in federal revenue during the years from 2002 to 2011. There are only two ways to offset such losses: allow the deficit to increase or cut federal spending.
The problem is that the majority of federal spending benefits people with lower and middle income. The Transfer Opportunity Program, for example, is a federally funded program that serves low income households and first generation college students here at the college. TOP’s budget at UCC has been cut by as much as $8000 per year for the past two years.
That is an example of where federal spending cuts can be felt. The sting of the Bush tax cuts is summed up by TPC stating that “the net effect of the tax cuts is a transfer of wealth from lower-income households to wealthier households.”
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