Bush Tax Cuts and Fairness

There was a fine editorial on tax rates and tax revenues in Monday's WSJ.  Basically the Bush tax cuts resulted in the largest increase in tax payments by the rich in history. 

2006 tax data (the most recent released by the IRS) shows that:

*the top 1% of earners were paying 40% of all income taxes
*the top 10% were paying 71%
*the top 50% were paying 97%
*the bottom 50% were paying 3%

Despite the left's dogmatic belief that the tax cuts were a huge give away to the rich, the reality is that from 2003 (the year of the tax cuts) to 2006 tax payments from millionaire households more than doubled (from $136 billion to $274 billion).  Plus the wealthy are paying a higher percentage of income taxes than any point in the last 40 years. As the editorial put it, "No President has ever plied more money from the rich than George W. Bush did with his 2003 tax cuts".  So, let's review: lower tax rates result in higher tax revenues.

Sen. Obama's plan to raise tax rates on the wealthy and cut taxes on lower income Americans faces a big problem.  When 50% of the population only pays 3% of income taxes, how can you cut their taxes?  Furthermore the data is clear: if taxes are raised on the wealthy it will result in lower than expected tax revenues and therefore lower percentage of tax revenues coming from the wealthy and a higher percentage coming from the bottom earners.

How does that fit the left's of fairness?

One Response

  1. There is an even more subtle problem. When half of your population is providing the funding for the other half, and your leaders are popularly elected by the whole, it sets up a very bad problem. Sort of like the old joke about two wolves and a sheep voting about what to have for dinner.

    This is the only thing that really gets me down. We continue to reward poor performance, and punish good performance. And every election cycle we go through we have a choice between: “I’m going to take away your stuff and give it to someone else” and “I’m going to take away [i]less[/i] of your stuff and give it to someone else.”

    Walter Williams has an inflammatory and thought provoking article on this topic here: http://www.townhall.com/columnists/WalterEWilliams/2008/06/11/are_americans_pro-slavery

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