In a speech to open the Bush Institute Conference on Taxes and Economic Growth in New York City, George W. Bush acknowledged the obstructive connotation that still attaches to his name, particularly when it comes to tax policy.
“I wish they weren’t called the Bush tax cuts,” he said. “If they’re called some other body’s tax cuts, they’re probably less likely to be raised.”
Bush has a really valid point. To hear opponents use the term, you’d think the “Bush tax cuts” reduced the marginal income tax rate for millionaires to about 1 percent and imposed a tax rate of 35 percent or so on the nearly half of Americans who don’t pay income taxes at all.
But what did the Bush tax cuts really do? They’re best known for reducing marginal income tax rates (the 39.6 percent bracket was reduced to 35 percent, the 36 percent bracket to 33 percent, the 31 percent bracket to 28 percent and the 28 percent bracket to 25 percent), but they also reduced the marriage penalty, increased the Child Tax Credit and the adoption credit, and increased tax breaks for education costs and dependent care costs, according to Heritage Foundation tax expert Curtis Dubay.
“Allowing the Bush tax cuts to expire” sounds innocuous. It’d be a different story if Democrats said what they really want to do: “We want to raise taxes by $166 billion.” That’s what allowing the Bush tax cuts to expire amounts to — a massive tax increase on income-taxpaying Americans. (Remember, nearly half of Americans pay NO income taxes! This hike doesn’t affect them, so they have no reason to oppose the expiration of the tax cuts — and every reason to vote for politicians who promise them handouts.)
What is, perhaps, worse about this proposed massive tax increase is that it would hit Americans at the same time that other tax cuts are expiring and various Obamacare tax hikes are taking effect. Consequently, Americans could face up to a $494 billion tax increase in 2013 — what some are calling Taxmageddon. We might not be in the midst of a recession, but job growth is still anemic and such a massive tax hike is the last thing we need if we want job creation to soar.
[Incidentally, Taxmageddon includes the expiration of the payroll tax cut, but, as I’ve explained before, the payroll tax, theoretically speaking, is not a tax but a direct contribution to Social Security. The expiration of that “tax cut,” then, is not a tax hike, but the lessening of one of the last remaining obligations imposed on all Americans by the sheer existence of the social safety retirement net. If we want Social Security (personally, I don’t, but I’m assuming most people do), everybody should have to chip in; the payroll “tax cut” lessens the investment of all Americans in Social Security. ‘Course, that’s the one “cut” the president actually likes — because it fuels his vote pump.]
These are big issues — and they can’t be avoided because the Bush tax cuts and the payroll tax cut are set to expire and other hikes are set to take effect at the end of this year no matter what. Congress has a history of pushing these issues off to the lameduck session. We’ve seen by the president’s rhetoric that he wants to delay the debates about these issues once again, but that leaves employers and others unable to plan for next year because they’re unsure of what their tax burden will be.
It’s time for the president and Congress to proactively tackle tough stuff like this — or be booted out of Washington for utter irresponsibility.