High-End Tax Hikes Would Have 'Negligible' Impact On Growth, Revised CRS Report Says

Michael McAuliff/Huffy Post

WASHINGTON -- A Congressional Research Service report that was reissued Thursday after Republicans complained about it before the elections still finds little evidence that the Bush-era tax cuts spurred growth or that hiking the top rates would have more than a "negligible" impact on the economy.

The CRS study did find, however, that the lower tax rates in place since 2001 have had a strong impact on increasing income inequality in America.

"Analysis of such data conducted for this report suggests the reduction in the top tax rates has had little association with saving, investment, or productivity growth," the study says. "It is reasonable to assume that a tax rate change limited to a small group of taxpayers at the top of the income distribution would have a negligible effect on economic growth."

The study focused on tax rates and economic growth since World War II. Democrats saw it as a key piece of evidence in their argument that tax rates on the top 2 percent of earners should go back up to Clinton-era levels to help deal with growing debt, deficits and the nearing "fiscal cliff." Republicans have balked, arguing that any tax hikes will hurt jobs and the economy.

"What this report demonstrates is at the core of the debate we're having right now," said Maryland Rep. Chris Van Hollen, the top Democrat on the House Budget Committee, adding that it "put a stake in the heart of the Republican argument that small increases in marginal tax rates for wealthy individuals somehow hurt economic growth."

Van Hollen noted that the economy under President Bill Clinton boomed in spite of tax hikes and it slowed under President George W. Bush after the tax cuts.

"What this CRS report does is take away the last little fig leaf that [Republicans] had to justify big tax cuts for very wealthy individuals," Van Hollen said.

"Republicans have simply failed to face up to the reality," said Rep. Sander Levin (D-Mich.), the top Democrat on the House Ways and Means Committee. "I hope that this CRS report will add further impetus to the speaker to sit down with Republicans, because when I've talked to a few of them, I don't think they've had this discussion."

Republicans had complained about the study's methodology and said that it was biased because it used phrases such as the "Bush tax cuts" and "tax cuts for the rich."

Antonia Ferrier, a spokeswoman for Sen. Orrin Hatch (R-Utah), the top Republican on the Senate Finance Committee, said in a statement that the GOP still believes the report has problems, and that it was Democrats who politicized the issue.

"What is disheartening ... is that a simple conversation between congressional staff and CRS about their economic analysis was turned into a political football by Democrats," Ferrier said.

"House Democrats are doing a bizarre victory dance with this report," she added. "Since it concludes that lower statutory tax rates have little to do with economic growth and could increase income inequality, the question to those Democrats is how high do you want to jack up those taxes? Are you suggesting that we could go to pre-Kennedy era tax rates –- 91 percent top marginal tax rate and 52 percent corporate rate -– and it would NOT have an impact? We look forward to seeing that legislation."

While the CRS is the non-partisan research arm of Congress, Ferrier pointed tostudies by outside groups that she said support the GOP position.

Democrats, however, offered their ideas on why they thought the GOP quashed the original document.

"Republicans tried to suppress this evidence," Van Hollen said. "They tried to prevent this report from really seeing the light of day because they don't like any evidence that exposes the fiction of their economic theory."

"The CRS report today just provides the final nail in the coffin of a fictional theory," he added.

House GOP Tax Plan Raises Taxes On 10 Times As Many People As Democratic Proposal

By Travis Waldron/Think Progress

Senate Republicans last week proposed a plan that would raise taxes on more than 20 million Americans, while maintaining the high-end Bush tax cuts. Letting those tax cuts on income in excess of $250,000 expire would affect just two million wealthy taxpayers, by comparison.

Now, House Republicans have adopted the same plan, and the effect is the same: roughly 24 million middle- and lower-class Americans will see their taxes raised so that roughly two million of the richest taxpayers can maintain a tax cut, as this chart from the Center for American Progress’ Seth Hanlon and Sarah Ayres illustrate:

Even worse, more than a third of families with children — a total of 18.6 million households, including 9.2 million single parents — would see a tax increase, according to Hanlon and Ayres’ analysis:

According to the analysis, roughly 11 million American families would lose some or all of the American Opportunity Tax Credit, which provides a tax break on college tuition payments, at an average cost of $1,100 each. About 12 million would lose part or all of the Child Tax Credit, costing them an average of $800, and about 6 million would lose all or part of the Earned Income Tax Credit, which saves each recipient an average of $500.

The Senate GOP plan failed last week, as the Senate instead adopted a Democratic proposal that would extend a tax cut on just the first $250,000 in income.

Romney’s Tax Cut For Millionaires Would Be Nearly Twice The Size Of George Bush’s

By Pat Garofalo/Think Progress

As we’ve been noting, Mitt Romney’s economic plan calls for a massive tax cut for the rich, even while the plan would likely result in a tax increase on millions ofmiddle class families. And as it turns out, Romney’s tax cuts for the rich would dwarf even those put in place by George W. Bush in 2001 and 2003, as Center for American Progress Director of Tax and Budget Policy Michael Linden noted:

Republican presidential candidate Romney’s plan for federal taxation begins with a hefty portion of Bush-era tax policy: Permanently extend all the tax cuts passed in 2001 and 2003, including those that mainly benefit the extremely wealthy.Then Romney layers on a heaping batch of new tax cuts for the rich, including a full repeal of the estate tax—which is currently paid by only the richest 0.14 percent of estates—and a massive corporate tax cut.

The result is a tax code that asks even less of the rich than George W. Bush’s did.

Romney’s plan also gives nearly 60 percent of its benefit to the richest 1 percent of Americans, while preserving the loopholes that let the wealthy pay less than middle class families.

Romney’s constantly claims that he’s “not worried about rich people,” and that his tax plan is “focused” on the middle class. In fact, he’s absurdly claimed that he’s not proposing any tax cuts for the wealthy at all. But as it turns out, he would lavish even more tax breaks onto the rich than did George Bush, even after Bush’s tax cuts were a significant factor leading to today’s large budget deficits.

The Average Bush Tax Cut For The 1 Percent This Year Will Be Greater Than The Average Income Of The Other 99 Percent

By Pat Garofalo/Think Progress

As Occupy Wall Street protestors continue to demonstrate across the country, congress’ fiscal super committee failed to craft a deficit reduction package due to Republican refusal to consider tax increases on the super wealthy. In fact, the only package that the GOP officially submitted to the committee included loweringthe top tax rate from 35 percent to 28 percent, even as new research shows that the optimal top tax rate iscloser to 70 percent.

Sen. Patty Murray (D-WA), who co-chaired the super committee, explained that the major sticking point during negotiations with the GOP was what to do with the Bush tax cuts. With that in mind, the National Priorities Project points out that those tax cuts this year will give the richest 1 percent of Americans a bigger tax cut than the other 99 percent will receive in average income:

The average Bush tax cut in 2011 for a taxpayer in the richest one percent is greater than the average income of the other 99 percent ($66,384 compared to $58,506).

“The super committee failed to grapple with the extraordinarily costly Bush tax cuts for the richest—tax policies that, according to the Congressional Budget Office, cost more in added federal debt than they add in additional economic activity,” explained Jo Comerford, NPP’s Executive Director. Frank Knapp, vice chairman of the American Sustainable Business Council, added in a statement yesterday, “the high-end Bush tax cuts are a big part of the problem – not the solution…It’s obscene to keep slashing infrastructure and services for everybody on Main Street to keep up tax giveaways for millionaires and multinational corporations.”

The Bush tax cuts have done nothing but blow up the federal debt and hand billions in tax breaks to the Americans who needed them least. As a reminder, past grand bargains when it came to the budget included substantial new revenues, to balance the pain of getting the country’s budget in order. Instead of adopting that approach, the GOP wants to continue lavishing tax breaks onto the 1 percent, while asking everyone else to sacrifice.

The $2.5 Trillion Tragedy: What America Has Given Up For 10 Years Of Bush Tax Cuts

By Zaid Jilani


Today marks the 10th anniversary of former President George W. Bush signing into lawhis 2001 tax cuts (he passed a second round in 2003). While doing so, Bush promised prosperity and growth, but the nation got neither.

The cost of these budget-busting 2001 and 2003 tax cuts was, as estimated by Citizens for Tax Justice, roughly $2.5 trillion through 2010. But America didn’t have to go down this route of cutting taxes and hoping for growth to miraculously appear. There were other policy options available to policymakers.

ThinkProgress, using data on various social spending projects from the National Priorities Project — which does these calculations for the cost of the Iraq and Afghan wars — has estimated ten other possible policies we could’ve paid for at the same $2.5 trillion price of the Bush tax cuts. While not all of these policies are currently performed by the federal government, they do represent an accurate calculation of the monetary tradeoffs, and each one individually would cost the same as the Bush tax cuts. Here are ten alternatives we could’ve pursued instead:

- Give 122.7 Million Children Low-Income Health Care Every Year For Ten Years

- Give 49.2 Million People Access To Low-Income Healthcare Every Year For Ten Years

- Provide 43.1 Million Students With Pell Grants Worth $5,500 Every Year For Ten Years

- Provide 31.5 Million Head Start Slots For Children Every Year For Ten Years

- Provide VA Care For 30.7 Million Military Veterans Every Year For Ten Years

- Provide 30.4 Million Scholarships For University Students Every Year For Ten Years

- Hire 4.19 Million Firefighters Every Year For Ten Years

- Hire 3.67 Million Elementary School Teachers Every Year For Ten Years

- Hire 3.6 Million Police Officers Every Year For Ten Years

- Retrofit 144.6 Million Households For Wind Power Every Year For Ten Years

- Retrofit 54.2 Million Households For Solar Photovoltaic Energy Every Year For Ten Years

The tradeoffs paint a stark picture. For the same price as the Bush tax cuts, which did little to help the economy, we could’ve sent tens of millions of students to college, retrofitted every household in America with the capacity to generate alternative energy, hired millions of firefighters and police officers, effectively ended our national shame of having kids who lack health care coverage, or put millions of more teachers into classrooms. But instead, Congress passed budget-breaking tax cuts, and then went on to pass even more in 2003. In 2010, Congress then went on to renew the Bush tax cuts for an additional two years, and the political will for the sort of public investments listed above appears to have dried up.

Key House Republican Vows To Block Middle Class Tax Cuts If Rich Aren’t Given Their Fair Share

By Alex Seitz-Wald One of the key votes that will take place during the lame duck congressional session that began yesterday is what to do with the Bush tax cuts. President Obama and congressional Democrats want to extend the cuts for just middle class families, noting that extending the cuts for the richest two percent of Americans will add $830 billion to deficit over the next ten years. Republicans demand an extension of all the cuts, but have so far failed to put forward any convincing (or truthful) arguments explaining why giving the wealthiest Americans another tax break is the best use of almost a trillion dollars while the nation faces painful cuts to valuable government programs. Today, a compromise emerged, which would split the issue into two votes — one for extending the tax cuts for the middle class, and another for the rich. But as soon as the potential deal was floated by White House allies, a leading Republicans shot it down. Rep. Dave Camp (R-MI), who plays a key role in GOP tax policy as the ranking member on the House Ways and Means Committee, which handles taxes, “said the GOP will block any proposal that extends tax cuts for the middle class for a longer period than those for the wealthy.” If Democrats insist on a longer period for the middle class cuts, “I think this issue will end up getting kicked into next year,” Camp said: In a speech to the Tax Council, a business group, Mr. Camp called that plan “a terrible idea and a total nonstarter. We would be foolish to fall for it,” he said. Appearing on Fox News host Sean Hannity’s radio show today, Senate Minority Leader Mitch McConnell (R-KY) struck a similar tone, saying, “There’s only one thing that’s acceptable and that’s to not raise taxes on anyone.” “We’re not going to go along with…splitting it into two different sets of Americans”: As New York Times columnist Frank Rich pointed out Sunday, “It’s the very top earners, not your garden variety, entrepreneurial multimillionaires, who will be by far the biggest beneficiaries” of an extension on the cuts for rich. Thankfully, congressional Republicans have signaled they will not rest until those “very top earners” get their cut — even it means going home without a vote and letting the tax bill go up for middle class families come January 1.