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REPORT: Expiration Of High-End Bush Tax Cuts Would Have Little Effect On Economic Growth

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United States is approaching the so-called “fiscal cliff” at the end of 2012, when a set of policies enacted by the debt deal reached in August 2011 will go into effect. In addition to massive spending cuts, several tax provisions will expire, including the full Bush tax cuts.

Though both the GOP and Democrats agree that the low-end Bush tax cuts, those that give everyone a tax cut but primarily affect the middle class, need to be extended, Republicans have blocked that in order to leverage an extension of the upper-income tax cuts. The logic, Republicans argue, is that not doing so will raise taxes on “job creators” at a time when the economy can least afford it.

An analysis of the fiscal cliff policies by the Economic Policy Institute, however, found that the cost of the Bush tax cuts —and particularly those for high-income earners —far outweigh the benefits:

EPI’s analysis found that letting the entire Bush tax cuts package expire would cause “just over one-third” of the damage of letting the stimulus measures (primarily made up of the payroll tax cut and other middle class tax cuts) expire and less than half the damage of the spending cuts. The high-end Bush tax cuts, as the chart shows, account for 7.3 percent of the cost of the fiscal cliff policies but just 2.3 percent of the economic benefit, meaning their expiration would save a substantial sum of money with a negligible effect on economic growth.

The findings are similar to an earlier report from the Congressional Budget Office that found the expiration of the high-income Bush tax cuts, once multipliers are added, would cause far less economic damage than spending cuts to the discretionary budget favored by Republicans.

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by on Sep. 24, 2012 at 8:50 AM
Replies (31-32):
by on Sep. 25, 2012 at 8:25 AM
1 mom liked this

Tax cuts represent lost revenue. Our taxes are at a historic low, especially for the top earners who would be least affected by an increase.  It's foolish to rely on tax cuts alone, but it's also extremely foolish to think leaving them in place will help the economy.  It hasn't helped much over the last 12 years, has it?

by on Sep. 25, 2012 at 11:03 AM

Oh, you mean the spending like bailing out big companies so that hundreds/thousands wouldn't LOSE their jobs?  

I'm talking about job creation.  The tax cuts did not work to create jobs.  The 'out of control' spending has nothing to do with the rich people, you know, the job creators, NOT creating jobs.  

The trickle down is a joke. 

If the rich could get going on creating jobs, maybe the government wouldn't be stuck having to choose to extend unemployment benefits and to dole out more in food stamps so people can put food on their tables (as you might call, 'out of control' spending).  Tax cuts cost even more money when they don't work.  The 'out of control' spending may not have been necessary if the rich business owners weren't shipping jobs overseas so they could pay employees practically nothing.  While getting used to lesser tax rates....and then bitching about it when tax cuts - yes, cuts- will expire.  Maybe they should have done something with those tax cuts and there would be no need to expire them.

When it comes down to it....the real guilty ones in the mess are the banks who made bad loans hoping they would get more money...and the people who took those loans thinking the size of their house was what was important, at whatever cost.  Greed is dangerous.

Quoting Carpy:

Ummm, read the part in RED

Quoting one_on_the_way:

Nope.  They didn't.  If they did, then why are we still talking about lack of jobs?

Quoting Carpy:

Actually yes, the tax cuts worked. What did not work was the out of control spending. progressives should love Bush.

Quoting mommom2000:

Quoting Carpy:

Tax cuts do not cost money.  To think so, assumes all money belongs to the government and they just allow you to have what they deem you deserve.  Government does not live within its means.  That is not the fault of the workers who earn their money.

LOL Of course they do,where do you think the government receives it's revenue. Saying taxes don't matter is one of the more crazier right wing talking points. Bush cut the taxes and did it spur all this growth like he said.  Trickle trickle it's a myth.

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