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The Bush Tax Cuts in Pictures

August 23, 2010

On Monday, New York Times columnist and Nobel Prize winning economist Paul Krugman summed up Republicans wanting to make permanent the Bush tax cuts for the wealthiest Americans. At a time of record income inequality and massive budget deficits, Republican "politicians are eager to cut checks averaging $3 million each to the richest 120,000 people in the country." While that single sentence encapsulates this latest $700 billion GOP windfall for the wealthy, the story of the Republicans' perpetual push for upward income redistribution is perhaps best visualized in a few handy charts.
Here, then, are the Bush tax cuts in pictures.
Earlier this month, the nonpartisan Joint Committee on Taxation examined the impact of the Democratic proposal to let the Bush tax cuts of 2001 and 2003 lapse for just the top bracket households making over $250,000 year. "Taxpayers with income of more than $1 million for 2011 would still receive on average a tax cut of about $6,300 compared with what they would have paid under rates in effect until 2001", the New York Times reported, adding, "that compares, however, with the roughly $100,000 average tax cut that households with more than $1 million in income would receive under current rates." In words and pictures, The Washington Post explained the payday for the rich if the GOP gets its way:

New data from the nonpartisan Joint Committee on Taxation show that households earning more than $1 million a year would reap nearly $31 billion in tax breaks under the GOP plan in 2011, for an average tax cut per household of about $100,000.

(Click here to see full size chart.)

The price tag for Americans' largesse for the wealthiest who need it least? $36 billion in 2011 alone, and $700 billion over the next decade.
In July, the reliably Republican Wall Street Journal offered its own pretty picture of the contending Democratic and Republican tax proposals. Despite GOP mythmaking about a "$3.8 trillion tax increase" and the "ticking tax bomb," President Obama and his Democratic allies are offering middle class Americans greater tax relief at virtually income level:

But while the next gilded class giveaway can still be stopped, the vault-fattening the past nine years is already a done deal.
In February 2004, President Bush proclaimed, "we cut taxes, which basically meant people had more money in their pocket." Of course, some people are more equal than others.
As the Center for American Progress noted at the time, "for the majority of Americans, the tax cuts meant very little," adding, "By next year, for instance, 88% of all Americans will receive $100 or less from the Administration's latest tax cuts."
But that's just the beginning of the story. As the CAP also reported, the Bush tax cuts delivered a third of their total benefits to the wealthiest 1% of Americans. And to be sure, their payday was staggering. The Center on Budget and Policy Priorities detailed that by 2007, millionaires on average pocketed $120,000 from the Bush tax cuts of 2001 and 2003. Those in the top 1% stashed an extra $45,000 a year. As a result, millionaires saw their after-tax incomes rise by 7.6%, while the gains for the middle quintile and bottom 20% of Americans were a paltry 2.3% and 0.4%, respectively.

And as the New York Times uncovered in 2006, the 2003 Bush dividend and capital gains tax cuts offered almost nothing to taxpayers earning below $100,000 a year. Instead, those windfalls reduced taxes "on incomes of more than $10 million by an average of about $500,000." As the Times explained in a jaw-dropping chart: "The top 2 percent of taxpayers, those making more than $200,000, received more than 70% of the increased tax savings from those cuts in investment income."

(Click here for full size image.)

So it should come as no surprise, as Vermont Senator Bernie Sanders lamented last month, that under President Bush the 400 richest taxpayers saw their tax rates halved - and their incomes double.

To help sell these lottery-style winnings for the wealthy, Republican leaders including Mitch McConnell, John Boehner, Judd Gregg, John McCain, Tom Coburn, Carly Fiorina, Marco Rubio and an endless parade of others insisted that the Bush tax cuts did not contribute to the mushrooming national debt and that "tax cuts pay for themselves." (As recently as Sunday, McConnell asked, "Why did it all of a sudden become something that we, quote, 'pay for'?")
As it turns out, of course, the Bush tax cuts produced - and will produce - nothing but red ink as far as the eye can see.
The Center on Budget and Policy Priorities demolished the mythology promoted by President Bush ("You cut taxes and the tax revenues increase") and the usual suspects on the right. CBPP found that Bush tax cuts accounted for almost half of the mushrooming deficits during his tenure:

And as another recent CBPP analysis revealed, over the next 10 years, the Bush tax cuts if made permanent will contribute more to the U.S. budget deficit than the Obama stimulus, the TARP program, the wars in Afghanistan and Iraq, and revenue lost to the recession put together.

The Bush tax cuts didn't come anywhere close to paying for themselves. And making them permanent is the very worst thing the so-called deficit hawks could do to reduce the U.S. debt.

By now, you get the picture. But as the "10 Republican Lies about the Bush Tax Cuts" reveals, the GOP's strategy requires that you don't. As Paul Krugman summarized the latest Republican pitch for the rich:

And where would this $680 billion go? Nearly all of it would go to the richest 1 percent of Americans, people with incomes of more than $500,000 a year. But that's the least of it: the policy center's estimates say that the majority of the tax cuts would go to the richest one-tenth of 1 percent. Take a group of 1,000 randomly selected Americans, and pick the one with the highest income; he's going to get the majority of that group's tax break. And the average tax break for those lucky few -- the poorest members of the group have annual incomes of more than $2 million, and the average member makes more than $7 million a year -- would be $3 million over the course of the next decade.

Not a pretty picture, is it?

20 comments on “The Bush Tax Cuts in Pictures”

  1. Let's keep all the tax cuts -- wealthy, middle and poor -- and have some government spending cuts to go along with them.
    I looked at all your charts and I think I get your message. Here's mine: IT'S NOT YOUR DAMN MONEY!!!!

  2. more class warfare from my friends the Democrats. Negative campaining, plantation politics, racism and class warfare.
    the top 20% of wage earners in the US pay over 80% of all individual income taxes collected.
    But, for these Democrats, its not about the money... it's about deamoninzing the "rich" to rally the votes. Lets get "them"
    Its not gonna work any more. You will be held to your voting records this November and most of you will be tossed out on your head.

  3. Um, where does some of this data come from anyway? Just out of curiosity, because if my wife and I count our son's income too, the three of us might make $50000 this year... i.e. "Tax Takes" table.
    Maybe I should relocate or something, because that's not what I make.
    I like your presentation here (my irk is not directed at you by any means), It's grating against my will to continue to pay taxes, when they will only use it to bail out another set of companies that caused this mess in the first place...

  4. Did revenues go up or down after the 2002 tax cuts.. they went up.. Problem is spending.. not "tax cuts for the rich." This issue is NEVER addressed, spending and entitlements.
    My solution.. take all non mandatory spending and reduce it by the percentage of the money left over. This way the government would need to decided what pork would be cut. Perfectly good roads are being torn up to the dirt and replaced by union workers.. a complete waste of money. Build something permanent... i.e new roads, gymnasiums..
    Did Ronald Reagan whine about the America he "inherited" after Jimmy Carter. No he lead us down a path that is 180 degrees from our current President. He made Americans feel good about being Americans..

  5. Did New York Times columnist and Nobel Prize winning economist Paul Krugman ever one make a case why he has a moral right to another persons money? Is this how he proposes to finance the government goodies for himself? What kind of man decides that he should use the government to plunder someone elses stuff and give it to him? Is this really an acceptable plan to support your family? I couldn't look myself in the mirror if that was all I could come up with.
    We need to start right now teaching our kids that they are due the rewards of their own efforts but not those of other people. It's a road to disaster when people feel that they are owed a nice middle class life without any responsibility to actually earn it. No government could ever finance this because the producers wise up to the ripoff and leave or quit producing.

  6. You should be ashamed of yourself. You do nothing in this article but try to create class warfare. Blame the rich for everything. Blame those who have jobs for everything. Certainly don't blame our idiotic politicians who have been spending us towards oblivion for years. Tax dollars do not belong to Obama, Bush nor any other politician even though they all act like it is and you seem to think they do. Just remember that the top 50% of wage earners pay 96.03% of the taxes. So where is your real inequality? Right there. But no, you would rather promote class warfare. Bush was an idiot for spending as much money as possible. Obama is just making things worse with his adding to unlimited spending of our money (other people's money that is). The problem is not the lack of us Americans paying our taxes to the government. It is the horrible out of control spending of Bush and Obama. But certainly don't tackle those sorts of problems. Just blame it all of those who are successful. Let's not reward success. Lets demonize it. You and your ilk make me sick. You are no patriotic American. We could use far less people like you. Class warfare will solve nothing.

  7. It is interesting that this post is based on the hyper partisan, slice and dice, so called economist Paul Krugman. Keith Hennessey has a take down of Krugman's column:
    Picking apart a Krugman column is shooting fish in a barrel. Most people get bored doing it.
    I keep wondering why Princeton lets Krugman keep trashing its academic reputation.

  8. opiniononly has hit the nail right on the head. the democrat ideology, along with this article, is that the government is somehow OWED this money. Well guess what, taxing people, regardless of income, is taking THEIR money. I'd rather leave money in the hands of productive members of society, that know how to utilize capital, than to give it away to this politicians who have never run a successful business in their lives. wake up america. we need to fight against taxes for all level of earners!!!

  9. Nice picts and graphs... too bad things are skewed by graphing not the TAX rate but the actuall tax paid... and to think this isn't a socialist perspective would be laughable.
    Hey, with ALL those pretty figures 2 kids, 2 earners, 1 kid 2 earners, single... etc... where is the married no kids single earner?

  10. You are so confused on a lot of things....First the tax burden should be fair to all as in a flat rate of 5%.....and yes, the rich WILL pay more because 5% of a million is more yhan 5% of a thousand, but they get more to help stimulate the economy..........You are also confused by stating the taxe cuts promote the deficet ! The deficit is caused by EXCESSIVE SPENDING not tax cuts...........Tax cuts are GOOD for the people and the country, not your socialistic spins on what the causes are...REDUCE the government and cut spending for a start, then IMPEACH the entire cabinet along with the PHONEY ILLEGAL IMIGRENT PRETENDER to the office of the President.

  11. Patriot 765 posts, "the top 20% of wage earners in the US pay over 80% of all individual income taxes collected."
    Okay, but what percentage of TOTAL DISCRETIONARY INCOME is in the hands of the top 20% of wage earners?
    When you consider that in 2008, the median household income was approximately $50,000 (meaning 50% of households made less and 50% made more than $50,000), is it any wonder why the top 20% of wage earners are carrying more of the tax burden. The lower 50% certainly can't!
    IMHO, taxes should be progressive - as they are today and always have been since the U.S. Income Tax came into being. With this being said, you tax FAT, not MUSCLE, with FAT being DISCRETIONARY INCOME. The more income you have left after meeting the basic needs of your family, the more discretionary income one has.
    In other words, you can't get more taxes from those who are just making ends meet, if that!
    And if I understand the Democratic tax proposal, only the top 3%, at most, will be taxed more. Why? Because THEY'VE GOT MOST OF THE DISCRETIONARY INCOME.

  12. @opiniononly
    Actually, you're wrong. "Your Money" is a construct created by your government. They print it; they decide how to value it, and when policies are voted on by our elected officials, our income can be legally taxed to pay for them.
    @patriot 765
    I understand your frustration at having to pay taxes on things you don't agree with. I felt the same way about these tax cuts themselves, along with our two wars. This is why our votes on Senators as well as Presidents matter (as does our influence on said officials)
    @tax collector
    You are right that spending is equally as important as taxes. The trouble comes when you invoke tax breaks for ANYONE before the budget is balanced (and ideally, start payments on our national debt). Clinton was the last president that balanced our budget. The problem with your theory is in the subjective definition of the word "mandatory". Every government program is mandatory to those benefiting from it. Also: I don't believe that "making people feel good" necessarily makes up for all Reagan's destructive influence on our national budget. I promise I could make people feel good by spending hundreds of billions.
    I'm not sure I understand your point. Are you saying that Paul Krugman personally receives your income tax payments? Also: I feel sorry for parents who are unable to teach their children personal responsibility so long as our government contains social programs. But not as sorry as I'd feel for children who couldn't be fed, clothed, or housed if such programs were scrapped to help incompetent parents in teaching their kids a lesson.
    I am fairly certain this article was not intending to incite class warfare as much as to bolster the case that especially when our budget is already underwater, we should allow these ruinous tax cuts to expire rather than digging ourselves further into a hole. From a balance-sheet standpoint, cutting taxes IS spending, and that's what these diagrams are attempting to explain.
    Agreed that this article and its data are intended to push a certain agenda, namely that in a time where deficits are already ridiculously high, we are hesitant to enact an obvious form of revenue from a demographic that can afford it.
    @Rick Caird in Florida
    Your comment exemplifies the notion that if we just made proper budget cuts, we could have a budgetary surplus without taxing people at rates commeasurate to their income, and maintain all infrastructure, military, social programs and emergency funds. The numbers just don't add up. For example: We receive $915b from income taxes at the moment. To those who don't do much research, and whose problem with income tax is largely its complication, flat tax proposal sounds like a reasonable alternative. And 5% sounds like a nice, round number. But even Flat Tax advocates say that to return the revenue stream that we take today would require a 23% flat tax, and pretty much the only result would be shifting the majority of the tax burden to poor, middle-class, and elderly citizens. As far as cutting spending goes, this is always far easier said than done. It's easy to point at a couple of small or experimental programs that you don't personally agree with or that didn't work as expected and extrapolate that they are the tip of an iceberg of useless spending that, if cut, would magically balance our budget. But looking at the federal budget, it would be very difficult to come up with high-dollar cuts that would impact the budget as much as letting these tax cuts expire. A 5% flat tax would be the worst possible option- increasing taxes on those who can't afford it (and who would be sure to spend it, fueling our economy), and decreasing taxes on the wealthy.(those best equipped to hoard, and withhold money from the economy). Incidentally, none of these facts derive from whether or not our president is a [sic] "PHONEY ILLEGAL IMIGRENT PRETENDER".

  13. Dang, Perrspective, everyone rips you a new one. How dare you suggest cutting taxes on poor people and raising taxes on rich people? (sarcasm included).
    Your math made sense to me. But what do I know about math. I am an accountant. (more sarcasm).
    If you could in a future post, find out what kind of pathology leads these people to believe that somehow "it's not the gov't's money", and that "the gov't is stealing the money from people". And that somehow the poor black kid in ghetto Detroit has just a good a chance for success as some white male born in the hamptons.

  14. The rich should pay more because their businesses BENEFIT THE MOST from the government services (police and fire protection, an educated work force), roads, clean water, (think of canning factories that need clean water to can food), defense (the Navy, for instance, keeps the sea lanes open and safe for commerce), etc.. What are you "cut taxes folks" going to cut in spending, and how is it going to effect the country, including business?
    It's easy to say "It's my money," but you are still going to have to use it to pay for roads, clean water, defense, etc. Do you really think a "for profit" road or a "for profit Navy" is going to be cheaper if the "private sector" is in charge of them? Good luck with that...

  15. This talk about whose money it is avoids discussion about how that wealth was created. Way too high a share of the value created goes to the top 1% of our population who did little more than invest. Democracy cannot exist where the bulk of the population has little or no economic power or even incentive to work diligently. One doesn't work hard in circumstances where no chance of advancement exists and that's where we are headed by concentrating wealth in the few. A robust middle class is essential to a strong capitalist economy. No argument even from the Chicago School here. Get past greed and build a strong foundation for the future by developing workers.

  16. It's troll warfare! Not to worry, they'll be believers when the government craters under the weight of making the wealthiest wealthier and they lose those services they've enjoyed under our "socialist" government.

  17. (i)Let's keep all the tax cuts -- wealthy, middle and poor -- and have some government spending cuts to go along with them.
    I looked at all your charts and I think I get your message. Here's mine: IT'S NOT YOUR DAMN MONEY!!!!
    Posted by opiniononly on August 24, 2010 1:57 PM(/i)
    but it's our damn 14$ tillion in debt we needs to pay back

  18. This is a good article, written in more detail. Government should be the main work is the development of the economy and improving people's lives and protecting the security of the state and people. This is the most important.

  19. Great blog article about this topic, I have been lately in your blog once or twice now. I just wanted to say hi and show my thanks for the information provided.


Jon Perr
Jon Perr is a technology marketing consultant and product strategist who writes about American politics and public policy.

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