End of an Era: Tax Cuts Losing Steam on Capitol Hill

[Frodo]

Tax cuts losing force as rallying cry on the Hill:
Lawmakers say constituents wary of deficit, help for rich

By Susan Milligan, Globe Staff  |  July 5, 2006

WASHINGTON -- Support for tax cuts -- a signature campaign issue for congressional Republicans -- is waning on Capitol Hill, with the GOP-led Congress reaching its Independence Day recess with no tax-trimming victories to tout in home districts.

Senate majority leader Bill Frist last week was forced to withdraw a measure to cut the estate tax, which foes derisively call the ``death tax," because there was not enough support for it.

Income tax cuts and credits -- including an expansion of the very popular child tax credit -- are still due to expire at the end of the decade, but Congress has not been able to agree on a proposal to make them permanent. Congress also has failed to fix the Alternative Minimum Tax, which was meant to target wealthy people but which is increasingly encroaching on middle-class Americans.

Some lawmakers said their constituents, who once clamored for tax cuts, have recently begun quizzing them about the deficit and questioning whether the tax cuts were doing more for wealthier Americans than the middle class.

Senator Olympia Snowe , Republican of Maine and a member of the Senate Finance Committee, said proposals both to eliminate the estate tax and cut taxes on capital gains and dividends would help the wealthy, a fact that more of her constituents seem to emphasize as she campaigns for a third term.

``That's a misallocation of our precious resources," said Snowe, who had supported an outright repeal of the estate tax in 2001, when the country had a budget surplus, but has since modified her view. ``It's certainly a misallocation of our priorities" at a time when the nation is facing a large budget deficit and record national debt, she said.

Representative Mark Foley , Republican of Florida, said his constituents have begun to demand answers about the country's fiscal shape. ``They are asking the question -- how did you let this get out of control?" Foley said.

[MODU]

There is plenty of room for additional tax cuts.  Pass the revised Presidential line-item veto, and you'll begin to see that we can do so much with so little.  California doesn't need a federally-funded pool.  Cut it.

[Bono]

There is plenty of room for additional tax cuts.  Pass the revised Presidential line-item veto, and you'll begin to see that we can do so much with so little.  California doesn't need a federally-funded pool.  Cut it.

Why would Bush start vetoing things now?

[they don't love you like i love you]

There is plenty of room for additional tax cuts.  Pass the revised Presidential line-item veto, and you'll begin to see that we can do so much with so little.  California doesn't need a federally-funded pool.  Cut it.

Except line-item veto is unconstitutional. I used to favor an Amendent that would add it, but now I'm convineced it's not a good idea.

And as Bono said, it's not like Bush vetoes things anyway.

[adam]

Tax cuts aren't anywhere near as big a problem as excess government spending.

[MODU]

There is plenty of room for additional tax cuts.  Pass the revised Presidential line-item veto, and you'll begin to see that we can do so much with so little.  California doesn't need a federally-funded pool.  Cut it.

Except line-item veto is unconstitutional. I used to favor an Amendent that would add it, but now I'm convineced it's not a good idea.

And as Bono said, it's not like Bush vetoes things anyway.

Bush hasn't really had to veto anything since he's been able to (for the most part) bully the Congress into cutting spending bills within a range that he desires before being voted upon.  In the few cases where he should have vetoed the bills, they had supermajority votes and were on key things, like the transportation bill, which were already delayed and needed to be passed.

As far as being unconstitutional, the new watered down line-item veto has passed muster with constitutional scholars and appears to be within the limits of the division of powers.  It's something that should be passed and enacted.  It will go a long way to deter Congressmen from throwing on pork projects that they know will be singled out by the President and made public for further debates.  Congressmen don't like to be publicly embarrassed.

[Undisguised Sockpuppet]

The problems are excess government spending on the proles, subsidies for farms/businesses and excess funding in the military/other thigns used to intervene in pissant thirdworld dictatroships

[Nym90]

It's about time. The vast majority of tax cuts have benefited only a very few while hurting the vast majority of Americans. I don't think it's healthy for the economy to perpetuate and increase this inbalance. Our current budget deficits will be far more harmful in the long run than the tax cuts enacted under Bush have been helpful.

Regarding the line-item veto, I think it gives too much power to the President. There needs to be a balance in power between the branches, and I think this would swing things too heavily toward the executive branch. Regardless of constitutionality, I think it's dangerous to put too much power into the hands of one man; I'd rather have the power of appropriations in the hands of 535 people instead.

[○∙◄☻¥tπ[╪AV┼cVê└]

Gee, it only took 6 years for people to realize what a joke this adminstration is on fiscal matters.

[Jacobtm]

Republicans should try cutting taxes for poor people.

How about getting rid of the income tax on anyone making under 50k a year?

[ATFFL]

Republicans should try cutting taxes for poor people.

How about getting rid of the income tax on anyone making under 50k a year?

Well, we have not had that, but the tax rates today are lower than they were before Bush took office.  On top of that, the standard deduction and exemption have increased.  In 2005 they were $8,200 for a single filer.  In 2001 (before the Bush cuts) they were $7450.

In 2001 someone who earned $15,000 would have owe $1,133 in taxes.  In 2005, someone earning the same amount owed $768.

Neat tax calculator

[bullmoose88]

Republicans should try cutting taxes for poor people.

How about getting rid of the income tax on anyone making under 50k a year?

Well, we have not had that, but the tax rates today are lower than they were before Bush took office.  On top of that, the standard deduction and exemption have increased.  In 2005 they were $8,200 for a single filer.  In 2001 (before the Bush cuts) they were $7450.

In 2001 someone who earned $15,000 would have owe $1,133 in taxes.  In 2005, someone earning the same amount owed $768.

Neat tax calculator

but how much of that increase in the standard deduction is due to inflation?

[MODU]

Help!  Help!  I'm rich and I keep getting tax cuts.  Make it stop!    Sorry folks, but I am far from the upper class that the left constantly harps about as receiving the benefits of tax cuts, yet my tax rate has been lower since the first tax cuts went into effect.  The only reason why my tax payments are higher are due to proceeds from stock sales and the jump in housing prices (which the VA tax rate on that has been cut as well).  So . . . I have lower tax rates yet the government is receiving more revenue from an improving tax base.  Seems like the tax cuts work.  Keep them/extend them.

[AuH2O]

The economy has grown by 20% since 2003. Tax cuts are a big part of that, because so much money has been invested in new enterprise or in existing small business.

Everyone has benefitted. Obviously rich people have benefitted-- if one person has $1,000, and another has $200, then a general gain of 10% makes $100 for the former and $20 for the latter.

However, that is the only way economic growth can function. If investors don't invest, fewer workers can work. While that means a "gap" exists, the alternative is for everyone to be poor, which explains why leftist economics are in decline almost everywhere in the world. Even Mexico.

[Moooooo]

It's about time. The vast majority of tax cuts have benefited only a very few while hurting the vast majority of Americans. I don't think it's healthy for the economy to perpetuate and increase this inbalance. Our current budget deficits will be far more harmful in the long run than the tax cuts enacted under Bush have been helpful.

Regarding the line-item veto, I think it gives too much power to the President. There needs to be a balance in power between the branches, and I think this would swing things too heavily toward the executive branch. Regardless of constitutionality, I think it's dangerous to put too much power into the hands of one man; I'd rather have the power of appropriations in the hands of 535 people instead.

I was going to post in this thread, but Nym hit the nail on the head so...

^^^^

[Moooooo]

The economy has grown by 20% since 2003. Tax cuts are a big part of that, because so much money has been invested in new enterprise or in existing small business.

Dont forget the fact that the fed went on interest rate slashing spree post 9/11.  With interest rates at .5% its pretty hard for the economy not to grow.

[ATFFL]

The economy has grown by 20% since 2003. Tax cuts are a big part of that, because so much money has been invested in new enterprise or in existing small business.

Dont forget the fact that the fed went on interest rate slashing spree post 9/11.  With interest rates at .5% its pretty hard for the economy not to grow.

Well, they are raising them all over the place and the economy is still outgrowing thier projections.  Tax revenue grew 250 billion dollars more than expected, mostly from a surge in corporate taxes and increased dividend taxes.  You know, the tax cut that the Democrats tried their hardest to kill since it only benefitted the wealthy.  Yeah, that is fueling the revenue growth.

This is mainly because the tax on dividends was so high that dividends were no longer a useful tool to attract investors.  So companies stopped offering them.  Following the tax cut, dividends became a useful tool again and more companies are offering them. 

[AuH2O]

The economy has grown by 20% since 2003. Tax cuts are a big part of that, because so much money has been invested in new enterprise or in existing small business.

Dont forget the fact that the fed went on interest rate slashing spree post 9/11.  With interest rates at .5% its pretty hard for the economy not to grow.

Aha, but it was not accompanied by significant inflation. If keeping rates low came with no side effects, they would always be low.

It's curious, in general, that Clinton was praised for presiding over a good economy but, now that Bush is doing to same, he receives minimal credit. I think Presidents are overrated in terms of their influence on the economy, but what's good for the goose...

[opebo]

The economy has grown by 20% since 2003. Tax cuts are a big part of that, because so much money has been invested in new enterprise or in existing small business.

Dont forget the fact that the fed went on interest rate slashing spree post 9/11.  With interest rates at .5% its pretty hard for the economy not to grow.

Aha, but it was not accompanied by significant inflation. If keeping rates low came with no side effects, they would always be low.

It's curious, in general, that Clinton was praised for presiding over a good economy but, now that Bush is doing to same, he receives minimal credit. I think Presidents are overrated in terms of their influence on the economy, but what's good for the goose...

The economy was not particularly good for the vast majority under either president, but at least under Clinton a small percentage of the 'growth' trickled down to the working class.  Under Bush virtually non has.  The reason?  Inadequate job growth/wage increases.

[dazzleman]

Tax cuts aren't anywhere near as big a problem as excess government spending.

^^^^^^^

[Nym90]

Help!  Help!  I'm rich and I keep getting tax cuts.  Make it stop!    Sorry folks, but I am far from the upper class that the left constantly harps about as receiving the benefits of tax cuts, yet my tax rate has been lower since the first tax cuts went into effect.  The only reason why my tax payments are higher are due to proceeds from stock sales and the jump in housing prices (which the VA tax rate on that has been cut as well).  So . . . I have lower tax rates yet the government is receiving more revenue from an improving tax base.  Seems like the tax cuts work.  Keep them/extend them.

I think the relationship you cite is a bit flawed. Due to inflation, government revenues will continue to increase; they haven't been going up as quickly as they did before the Bush tax cuts did. In addition, the fact that spending hasn't been cut has helped to prevent the economy from going totally down the drain; if you are willing to run a massive deficit, you can keep the economy going strong despite tax cuts, but in the long term the country will suffer for the debt, especially since so much of it is now owed to foreign citizens.

One can make arguments for the tax cuts on other grounds, but the supply side theory that tax cuts bring in more revenue for the government than they cost it has been fairly clearly debunked in my opinion.

It's somewhat akin to arguing that you'll make more money by working fewer hours, since this would give you more opportunity to search for a higher paying job (and not just more money per hour worked, but actually more total money).

Yes, everyone's taxes are lower than they were before Bush, but for the vast majority of people the benefit of those cuts hasn't come anywhere close to balancing out the negative effects.

[Nym90]

The economy has grown by 20% since 2003. Tax cuts are a big part of that, because so much money has been invested in new enterprise or in existing small business.

Dont forget the fact that the fed went on interest rate slashing spree post 9/11.  With interest rates at .5% its pretty hard for the economy not to grow.

Aha, but it was not accompanied by significant inflation. If keeping rates low came with no side effects, they would always be low.

It's curious, in general, that Clinton was praised for presiding over a good economy but, now that Bush is doing to same, he receives minimal credit. I think Presidents are overrated in terms of their influence on the economy, but what's good for the goose...

I would argue that the growth rate of the economy as a whole is not the only factor to consider when evaluating a President's economic performance. Clinton was able to achieve strong growth while running a large surplus, while Bush has required a massive deficit, not to mention the fact that the growth under Bush has much more disproportionately benefited fewer people.

I agree that the President's effect on the economy is overrated, yes. Much like the coach of a football team or pretty much anyone else in a leadership position, they don't have as much influence as people would imagine, and thus tend to get too much praise for their successes and too much blame for their failures. However, they still have more influence than any other single individual. Part of the job of anyone in a leadership role is to persuade people below them to become more productive; a big part of the President's job in managing the economy is in inspiring consumer and business confidence even if the numbers don't always agree with the optimistic picture.

[ATFFL]

Help!  Help!  I'm rich and I keep getting tax cuts.  Make it stop!    Sorry folks, but I am far from the upper class that the left constantly harps about as receiving the benefits of tax cuts, yet my tax rate has been lower since the first tax cuts went into effect.  The only reason why my tax payments are higher are due to proceeds from stock sales and the jump in housing prices (which the VA tax rate on that has been cut as well).  So . . . I have lower tax rates yet the government is receiving more revenue from an improving tax base.  Seems like the tax cuts work.  Keep them/extend them.

I think the relationship you cite is a bit flawed. Due to inflation, government revenues will continue to increase; they haven't been going up as quickly as they did before the Bush tax cuts did. In addition, the fact that spending hasn't been cut has helped to prevent the economy from going totally down the drain; if you are willing to run a massive deficit, you can keep the economy going strong despite tax cuts, but in the long term the country will suffer for the debt, especially since so much of it is now owed to foreign citizens.

One can make arguments for the tax cuts on other grounds, but the supply side theory that tax cuts bring in more revenue for the government than they cost it has been fairly clearly debunked in my opinion.

It's somewhat akin to arguing that you'll make more money by working fewer hours, since this would give you more opportunity to search for a higher paying job (and not just more money per hour worked, but actually more total money).

Yes, everyone's taxes are lower than they were before Bush, but for the vast majority of people the benefit of those cuts hasn't come anywhere close to balancing out the negative effects.

The Reagan tax cuts saw income tax revenus grow at the normal rate.  No loss as many expected.  Yet total revenue grew due to non-tax sources.  Now, Clinton does not see huge growth in revenue until after the Republicans take Congress.

Since the 2003 cuts, revenue growth under Bush has been greater than under Clinton.  This is because of both immediate tax growth and the outside revenue growth effect of tax cuts.

The argument that tax revenues fall after a cut is true.  They usually do decrease for a year or two.  After that, they rise faster than inflation and total revenue has always risen.

Obviously we cannot expect to just keep slashing taxes and seeing total revenue rise.  But the reality of the numbers shows Bush has not cut them below the point where they are effective.

[AuH2O]

Bush's true failing has been allowing Congress to balloon spending. He doesn't even control the Federal Reserve, so you can't really give him credit or blame for their decisions. The tax cuts were good, but need to be accompanied by fiscal restraint.

[Moooooo]

You seem more moderate since taking a break from the forum.  Where is the old AuH2O?