The Truth about the Bush Tax Cuts

Wealthy Democrat politicians are never afraid to tell voters that they do not need the Bush tax cuts. What they are afraid to tell voters is that tax cuts help the economy.

When tax rates are cut, government revenue actually increases. That is why revenue collections were at an all-time high this year. They were also higher in each year of Reagan’s two terms than any previous year in American history. How does this work? Simply put, when less of your money goes to taxes, it gets spent in the economy. The increase in economic activity, even at a lower tax rate, generates more tax revenue. When taxes are cut, everybody wins (except liberal politicians).

What is happening today is the same thing that happened in the 1980’s when Reagan cut tax rates, the 1960’s under John F. Kennedy’s cuts, and also in the 1920’s.

Democrats love to point out the rise in the deficit during the Reagan administration, but who is it that spends the money? It’s not the President, but the Congress, and all spending bills come from the House of Representatives. Congress found a way to write enough checks that even the record revenues couldn’t cover. Economist Thomas Sowell points out: “There is no amount of money that Congress can’t outspend.” Reagan got the blame for a Democrat-controlled Congress’ spending spree. If they are so concerned with the deficit, then why don’t they slow their spending? Conversely, in 1994, Republicans took control of the House, and Bill Clinton took the credit for the budget surplus, although he was not a member of the House.

Democrats also want you to believe that Bush’s tax cuts are “for the rich.” While the rich do get more of a tax cut, they have more of the burden in the first place (For a different spin on this, read Ten Men Went to Dinner). What these politicians won’t point out is that the “rich” actually shoulder more of the tax burden than they did before the tax cuts. Before the tax cuts, in 2000, the top quintile (top 20 percent of wage earners) paid 81.2% of taxes. In 2004, shortly after the Bush tax cuts went into effect, they paid 85.3%. The next to lowest quintile (20-40%) went from 1.1% to -0.9%, and the lowest quintile went from -1.6% to -2.9%. The bottom 40% are actually subsidized, so of course they would benefit less than those who actually pay taxes.

Democrats have done a pretty good job of misleading the American people on the tax cuts. The scary thing is that in order to gain more power in Washington, they will knowingly put an end to something that is proven to strengthen our economy. America did not become the greatest country in the world (in only 200 years) because of high taxes and great government programs. Do we really want to put more politicians in office that will kill our economy in order to get elected?

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