dimanche 7 janvier 2018

Fact Check About the Trump, Bush, and Reagan Tax Cuts

Some folks are repeating all kinds of falsehoods and distortions about the Bush and Reagan tax cuts in their baffling effort to ignore the numerous positive aspects of the Trump tax cuts. Let's start with the Trump tax cuts.

Trump Tax Cuts

The best way to debunk the liberal distortions and falsehoods about the Trump tax cuts is to present the tax tables and to see who is getting what rate cuts:

Tax Bracket Tax Rate
$0.00+ 10% (no change)
$19,050+ 12% (cut from 15%)
$77,400+ 22% (cut from 25%)
$165,000+ 24% (cut from 28%)
$315,000+ 32% (cut from 33%)
$400,000+ 35% (no change)
$600,000+ 37% (cut from 39.6%)

As you can see, the biggest rate cuts are going to the middle class, not to the rich.

Bush Tax Cuts

* The Bush tax cuts came in two bills, the first signed in June 2001 and the second signed in May 2003. The 2001 bill reduced personal income taxes—however, these cuts were to be phased in over eight years and were not to be fully implemented until 2009. The 2003 bill accelerated the personal income tax cuts in the 2001 bill and added several business tax cuts. So by the end of 2002, only a fraction of the Bush personal income tax cuts had taken affect, and the business tax cuts had not yet been passed. Thus, we cannot judge the Bush tax cuts by federal revenue in 2001 and 2002.

* The Bush tax cuts—personal and business—really began in 2003 with the passage of the Jobs and Growth Tax Relief Reconciliation Act (JGTRRA) in May 2003. Financial expert Kimberly Amadeo explains some of the positive impacts of the 2003 tax-cut bill:
http://ift.tt/2E2m2L7.

* Federal revenue rose substantially after the 2003 tax cuts, going from $1.78 trillion to $2.56 trillion from 2003 to 2007, an increase of 43%.

* Total federal revenue for 2008 dropped slightly, down to $2.52 trillion, because a recession started that year, but revenue was still substantially higher than it was in 2003 or 2004.

* During the same period, 2003-2007, personal income tax revenue rose dramatically, going from $925 billion in 2003 to $1.53 trillion in 2007.

* Even in 2009, when the recession neared depression territory and remained severe throughout the year, total federal revenue was $2.10 trillion, which, even adjusted for inflation, was very close to total federal revenue for the boom years of 2005 and 2006.

* If Congress had not gone on a reckless spending spree after 2003, we would have kept the budget balanced and continued to pay down the debt. Tax cuts had nothing to do with the increase in the deficit. Tax revenue rose, but thanks to Congress, the hike in spending exceeded the hike in revenue.

Reagan Tax Cuts

* As liberals frequently note, Reagan did in fact agree to four tax hikes, in 1982, 1983, 1984, and 1986, but they ignore the fact that personal tax rates were still far lower when he left office than when he took office. Let's look at those tax hikes.

The 1983 “tax increase” was an increase in the payroll tax (i.e., the Social Security tax) that was part of a bipartisan bill to keep SS solvent. It seems a bit unfair to call this a “tax hike” when it was really just increasing the amount that taxpayers had to contribute to a fund from which they would later draw.

The 1982, 1984, and 1986 tax hikes involved business taxes, tax loopholes, and the capital gains tax. Those tax hikes did not affect personal income tax rates, and Reagan cut taxes again in 1986.

* Reagan cut personal income tax rates in 1981 and cut the capital gains tax rate for individuals in 1986. My article includes tax tables from tax years 1980 and 1988 so that anyone can look and see for themselves just how much Reagan cut income tax rates.

* In 1979, a year before Reagan was elected, the capital gains tax rate for individuals was 35%. In 1981, Reagan reduced that rate to 20%, and it stayed at that level for five years. In 1986, he agreed to raise the rate to 28%, but that was still far lower than what it had been before he took office.

* Federal revenue rose substantially after the Reagan tax cuts. Revenue rose by over 50% from 1983 to 1988, going from $326 billion to $549 billion. In 1989, the last year that a Reagan budget was in operation, revenue rose a whopping $53 billion, an increase of 10% from the previous year.

* But those huge boosts in revenue were more than offset by staggering spending hikes passed by Congress year after year. The Democrats started bundling spending bills into one giant omnibus spending bill, which left Reagan with two choices: sign them or shut down the government. If the government had restrained spending, the deficit would have been reduced, and the budget could have been balanced by 1986 or 1987.

In fact, tax revenue has risen after every major tax cut since the early 1900s. And, when Congress has cut or restrained spending after tax cuts, tax cuts have been followed by deficit reductions and balanced or nearly balanced budgets.


via International Skeptics Forum http://ift.tt/2m8AKcM

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