Fighting for a U.S. federal budget that prioritizes peace, economic security and shared prosperity
That's the conclusion of a new analysis by the Economic Policy Institute (EPI), in a report released last week: "Tenth Anniversary of the Bush-Era Tax Cuts: A decade later, the Bush tax cuts remain expensive, ineffective, and unfair."
According to EPI's website, their mission "is to achieve shared prosperity by raising the economic status of low- and middle-income Americans."
In the report EPI policy analysts Andrew Fieldhouse and Ethan Pollack detail ten findings:
1) The Bush tax cuts disproportionately benefited the wealthy – The top 0.1% of wage earners (those making over $3 million) received an average tax cut of roughly $520,000, more than 450 times larger than the share received by an average middle-income family.
2) The cuts did little for low-income families – In 2010, tax filers in the bottom 20% of wage earners (those making less than $20,000) received only a 1% share of the tax cuts, and 75% of these low-income families saw no reduction at all.
3) The tax cuts never trickled down – The Bush economic expansion had the worst wage and salary growth and total compensation growth of any postwar economic expansion, and workers fared progressively worse the lower their wages were.
4) The Bush tax cuts were a poorly designed economic stimulus – Moody’s Analytics Chief Economist Mark Zandi estimates that making the Bush tax cuts permanent generates only 35 cents in economic activity for every dollar of revenue. Meanwhile, the targeted refundable tax credits included in the American Recovery and Reinvestment Act (the stimulus package) are estimated to generate much more per dollar of uncollected taxes, ranging from $1.17 for the Making Work Pay Credit to $1.38 for the Child Tax Credit.
5) The Bush tax cuts failed to create strong long-run growth – Between the end of the 2001 recession and the peak of Bush-era expansion at the end of 2007, the U.S. economy experienced the worst economic expansion of the post WWII era.
6) The Bush tax cuts were so expensive that they added greatly to the debt – From 2001 through 2010, the cuts added $2.6 trillion to the public debt, nearly 50% of the total debt accrued during this period.
7) The Bush tax cuts were much more expensive than advertised – The Bush tax cuts were designed using a few budget gimmicks to obscure their true cost.
8) The Bush tax cuts continue to be expensive – The extension of the Bush tax cuts as part of the December 2010 tax deal is projected to decrease revenue by $423 billion over 2012-21, adding more than $5 trillion to the debt over the next decade. This represents about half of the total projected deficits over this period.
9) The Bush tax cuts eliminated the most progressive federal tax: taxes on large estates – The Bush tax cuts repealed the tax on large estates for the first time since 1916, eliminating the only federal tax on concentrated wealth.
10) A decade of Bush tax cuts are increasing interest spending today – The U.S. government has spent more than $400 billion over the last decade in higher interest payments to finance the debt created by the Bush tax cuts.
These are just some of the facts presented in the EPI analysis which call into question the economic benefits put forth by supporters of permanently extending the Bush tax credits. At a time when the federal deficit is in the forefront of everyone's thoughts, this information needs to be considered as the nation debates ways to reduce the deficit and stimulate economic recovery.