DEBUNKING MYTHS ABOUT THE BUSH TAX CUTS
March 19, 2007
Despite surging economic growth and 5 million new jobs since 2003, critics of the Bush tax cuts charge that they have not helped the economy and have widened inequality. In reality, nearly all of the conventional wisdom about the Bush tax cuts is wrong, says Brian M. Riedl, Grover M. Hermann Fellow at the Heritage Foundation.
- The tax cuts have not substantially reduced current tax revenues, which were in fact not far from the 2000 pre-tax cut baseline and over the 2003 pre-tax cut baseline in 2006.
- The increased child tax credit, 10 percent tax bracket, and fix of the alternative minimum tax (AMT) reduced tax revenues much more than most of the "tax cuts for the rich."
- Economic growth rates have more than doubled since the 2003 tax cuts.
- The tax cuts shifted even more of the income tax burden toward the rich.
Setting optimal tax policy requires governing with facts rather than popular mythology, which is why it is important to set the record straight by debunking the myths about the Bush tax cuts. Allowing the Democratic majority to repeal the cuts would only decrease investment, reduce work incentives, stifle entrepreneurialism, and reduce economic growth, says Riedl. Lawmakers should remember that America cannot tax itself to prosperity.
Source: Brian M. Riedl, "Ten Myths About the Bush Tax Cuts," Backgrounder No. 2001, Heritage Foundation, January 29, 2007.
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