Bush tax cuts IV-WELFARE for the WEALTHY

‘Welfare for the Wealthy’

As % of GDP DowJones Industrials Unemployment
Revenues Outlays (year-end close) Rate (%)
1980 19.0 21.7 964 7.1
1981 19.6 22.2 875 7.6
1982 19.2 23.1 1047 9.7
1983 17.5 23.5 1259 9.6
1984 17.3 22.2 1212 7.5
1985 17.7 22.8 1547 7.2
1986 17.5 22.5 1896 7.0
1987 18.4 21.6 1939 6.2
1988 18.2 21.3 2169 5.5
1989 18.4 21.2 2753 5.3
1990 18.0 21.9 2634 5.6
1991 17.8 22.3 3169 6.8
1992 17.5 22.1 3301 7.5

2000 20.6 18.2 10788 4.0
2001 19.5 18.2 10022 4.7
2002 17.6 19.1 8342 5.8
2003 16.2 19.7 10454 6.0
2004 16.1 19.6 10783 5.5
2005 17.3 19.9 10717 5.1
2006 18.2 20.1 12463 4.6
2007 18.5 19.6 13265 4.6
2008 17.5 20.7 8776 5.8
2009 14.8 24.7 10428 9.3

Sources: http://www.gpoaccess.gov/usbudget/fy11/sheets/hist01z3.xls
http://www.bls.gov/cps/cpsaat1.pdf

The Reagan and GWBush tax cuts took effect in years 1-3 after their respective elections, leading to a sharp drop in revenue as %of GDP during years 2-5. Most of the benefit went to the richest Americans, who put their windfall into the stock market and NOT, as Republicans and conservatives allege, into creating jobs and opportunities for the rest of Americans. After the cuts of 1981 and 2001-3, stocks entered a bull market phase and tax revenues began to gradually increase, although never returning to pre-tax cut levels. While unemployment spiked up in 1982-3 and then back down from 1984-1991, by the end of of both Republican tax cut eras, it was actually higher than it was at the start.

To summarize what actually occurred:
1. the wealthiest Americans received huge tax cuts early in the terms of Reagan
and GWBush
2. the Dow rallied from Dow 875 at the end of Reagan’s 1st year(1981) to over 2740
in Aug 1987 before crashing and then resuming the rally to new highs in 1992
3. the Dow rallied from 10,022 at the end of GWBush’s 1st year(2001) to over 13,850
in Dec2007 before crashing and then rallying back to 10,400 at the end of 2009
4. those most able to invest in and benefit from a bull market in stocks received
a “tax windfall” and then paid a lower tax rate “post-windfall” than “pre-
windfall”
5. the nation’s unemployment rate at the time of the stock market peaks in late- 1987
(6.2%) and 2007(4.6%) was little-changed from what it was when Reagan (7.1% in
1980) and GWBush(4.0% in 2000) took office



Now let’s look a Measure of Income Dispersion
Source:
http://www.census.gov/hhes/www/income/data/historical/inequality/taba2.pdf

Mean Household Income by Quintiles (in 2009 CPI-U-RS adjusted dollars)
Lowest 20% Second 20% Third 20% Fourth 20% Top 20%
1980 10,682 26,586 43,870 64,631 115,236
1981 10,414 25,942 42,975 64,061 114,432
1982 10,223 25,868 42,820 63,683 116,800
1983 10,342 25,980 42,954 64,457 118,343
1984 10,689 26,624 44,120 66,429 122,148
1985 10,672 27,046 44,893 67,528 126,139
1986 10,781 27,734 46,410 69,914 132,332
1987 11,076 28,148 47,060 71,133 135,278
1988 11,264 28,428 47,548 71,875 137,218
1989 11,681 29,063 48,311 73,076 142,851
1990 11,400 28,684 47,379 71,433 138,627
1991 11,098 27,875 46,302 70,582 135,349
1992 10,868 27,233 45,711 71,038 136,470
% Increase 1980-1992
1.74% 2.43% 4.20% 9.91% 18.42%
% Increase 1992-2000
16.41% 15.99% 15.08% 15.11% 29.85%

2000 12,651 31,588 52,603 81,774 177,203
2001 12,280 30,855 51,647 80,978 176,848
2002 11,911 30,284 51,032 80,271 171,382
2003 11,658 29,947 50,834 80,463 171,527
2004 11,633 29,765 50,431 79,518 171,965
2005 11,707 30,057 50,871 80,014 175,335
2006 12,077 30,614 51,301 81,201 178,904
2007 11,949 30,457 51,691 81,839 173,763
2008 11,612 29,405 49,942 79,457 170,408
2009 11,552 29,257 49,534 78,694 170,844

% Decrease 2000-2009
-8.69% -7.38% -5.83% -3.77% -3.59%
% Increase 1980-2009
8.14% 10.05% 12.91% 21.76% 48.26%


Overall, for the 30 year period since 1980, income for the top 20% increased at nearly 6X the rate at which it grew for the lowest 20% and at nearly 5X the rate of the second 20%.

During the Reagan years, income for the top 20% increased at more than 10X the rate at which it grew for the lowest 20% and at nearly 8X the rate of the second 20%. Under GWBush, all incomes dropped, but for the bottom 40% it dropped at a rate more than 2X greater than it did for the top 20%.

During the Clinton years (1993-2000), tax rates were raised slightly for the wealthiest Americans. The economy and stock markets boomed and incomes for the bottom 80% rose equally on a percentage basis. The top 20% still did nearly 2X better than everyone else, but American prosperity was shared, however briefly, for the only time period of the last 30 years.

This is NOT to say that higher tax rates were the driving force behind the economic boom of the Clinton years. However, the data presented here clearly shows that the Reagan and GWBush tax cuts are REGRESSIVE in their effect upon INCOME GROWTH. During the income growth period from 1980-1992, the top 20% saw their incomes grow at 8-10X the rate of the bottom 40%. During the income decline period from 2000-09, the bottom 40% saw their incomes decline at more than 2X the rate of the top 20%. On a PERCENTAGE BASIS, those who “needed it most” got the least in upturns and lost the most in downturns!

A truly progressive tax system is one in which those who can least afford it share on a proportionate percentage basis of income during both times of economic growth and contraction. A system of tax cuts for the wealthy which enables the rich to earn disproportionally greater income increases in good times and to experience disproportionally smaller income declines in bad times is nothing but WELFARE FOR THE WEALTHY and is truly SHAMEFUL!!

At least Warren Buffett and Bill Gates agree!

http://www.huffingtonpost.com/2010/11/21/warren-buffett-paying-more-taxes_n_786516.html

BUSH TAX CUTS III

THE MAIN REASON WHY WE NEED TO KEEP THE BUSH TAX
CUTS FOR THE WEALTHIEST AMERICANS (and why it’s
complete-and-utter GREEDY bullshit)

The top 3% of earners already pay a huge proportion of their hard-earned income in
Federal taxes. Raising the current top Marginal tax brackets on those making over
$200,000 from 33% and 35% to 36% and 39.5%, respectively, is punishing them for
their hard-earned success. After all, they pay more than 51% of the total taxes collected.

Bullshit!
The average tax rate paid by the top 3% of earners in 2008(Adjusted gross
income in excess of $204,000) was 21.88% of Adjusted gross income(“AGI”).
Recall from the recent blog “TAX BASICS” that AGI is income AFTER all the
allowable deductions AND that capital gains and qualified dividends receive
special tax rates much lower than those for ordinary income. 21.88% is a far cry
from the 33%,35%, 36% or 39.5% brackets the GREEDY scream and whine about.

By way of contrast, the 2008 tax owed by a single filer with an AGI of $46,000
was $7,850 or 17.06%! An individual who made 22.5% of what the wealthiest
Americans made paid at a rate equal to 78% of the average top rate! While a
married couple filing jointly with the same $46,000 AGI paid at the lesser rate of
13.26%, do the wealthiest Americans work so much harder and contribute so
much more to our society that they deserve to pay at only a slightly higher average
tax rate than those who earn much, much less? If that married couple with the
$46,000 AGI can afford to and does pay 13.26% without whining, can’t
those making over $204,000 afford an average rate of 26% or even 39.5%
without bitching and moaning about “big government” and “being punished”?

Haven’t the wealthy already ‘gamed’ the tax system through capital gains, itemized
allowable deductions, qualified dividends, special trusts, tax shelters, inheritance
provisions and high-paid accountants and attorneys whose sole purpose is to ‘push
the legal envelope’ to ensure their ‘patriotic’ clients pay as little as possible in taxes?
GREED GREED GREED!!!

SOURCES: http://www.irs.gov/taxstats/indtaxstats/article/o,,id=133521,00.html
http://www.irs.gov/pub/irs-prior/i1040tt--2008.pdf