TRUTH IN TAX TALK
June 4, 2007
Sen. Barack Obama's (Ill.-D) financing plan for his universal health care proposal constitutes a wide-ranging tax increase, says Eric Earling (Sound Politics).
He proposes returning to pre-Bush tax rates on incomes over $250,000, while increasing tax rates on estates over $7 million. That can plausibly be argued as only taxing the "rich," says Earling, but the greater harm would come from his proposal to let reductions in tax rates from 2003 on capital gains and dividends expire in 2010.
Much more than the tax cuts of 2001 that focused on individual income tax rates, the 2003 tax cuts on capital gains and dividends have had a demonstrably positive impact on the American economy. Pete du Pont with the National Center for Policy Analysis summarized the case well:
- Economic indicators show that since the 2003 tax cuts the gross domestic product (GDP) has grown an inflation-adjusted average of 3.3 percent a year, and eight million new jobs have been created over 44 consecutive months of job growth.
- Unemployment has fallen 25 percent, from 6.1 percent to 4.5 percent, with strong declines across all ethnic groups.
- Productivity growth has expanded 2.8 percent a year since 2001, outstripping the past three decades' average.
- So according to all these economic indices, the 2003 tax cuts have strengthened the American economy.
- The tax cuts have produced substantial tax revenue increases -- 14.5 percent growth in 2005 and 11.7 percent in 2006.
- For the first seven months of the current fiscal year, total revenues were up 11.3 percent over last year, and individual income tax receipts were up by 17.5 percent.
- Total tax receipts in April were $70 billion higher than in April 2006.
Source: Eric Earling, "Truth in Tax Talk," Sound Politics, June 2, 2007.
Browse more articles on Health Issues