Paul Revere by Cyrus Dallin, North End, Boston



Friday, February 27, 2009


“The claim that tax cuts pay for themselves…is contradicted by the historical record,” reported the Center on Budget and Policy Priorities, which showed that revenues grew twice as fast in the 1990s, when taxes were raised, than in the 1980s, when taxes were cut. called the claim that Sen. Kay Bailey Hutchison (R-TX) made--"Every major tax cut we’ve had in history has created more revenue. "--“highly misleading” and stated the obvious fact that “we can’t have both lower taxes and fatter government coffers.”


Since 2001, the Administration and Congress have enacted a wide array of tax cuts, including reductions in individual income tax rates, repeal of the estate tax, and reductions in capital gains and dividend taxes.

Nearly all of these tax cuts are scheduled to expire by the end of 2010. Making them permanent would cost about $4.4 trillion over the next decade (when the cost of additional interest on the federal debt is included). (

Because important decisions about these tax policies must be made in the next few years, it is essential to understand their effects on deficits, the economy, and the distribution of income.

Supporters of the tax cuts have sometimes sought to bolster their case by understating the tax cuts’ costs, overstating their economic effects, or minimizing their regressivity.

Here, we address some of the myths heard most frequently in recent tax-cut debates. (For a discussion of myths specific to the estate tax debate, see

For a discussion of issues surrounding the Alternative Minimum Tax, see

“You cut taxes and the tax revenues increase.” — President Bush, February 8, 2006

“You have to pay for these tax cuts twice under these pay-go rules if you apply them, because these tax cuts pay for themselves.” — Senator Judd Gregg, then Chair of the Senate Budget Committee, March 9, 2006

Reality: A study by the President’s own Treasury Department confirmed the common-sense view shared by economists across the political spectrum: cutting taxes decreases revenues.

“Some in Washington say we had to choose between cutting taxes and cutting the deficit… Today’s numbers [the updated 2006 budget projections] show that that was a false choice. The economic growth fueled by tax relief has helped send our tax revenues soaring.” — President
Bush, July 11, 2006

Reality: Robust revenue growth in 2005-2007 has not made up for extraordinarily weak revenue growth over the previous few years.


TRUTH101 said...

Republicans have always believed the TRUTH should never stand in the way of a good lie.

President Obama: my tax cut will be around $8 a week. I personally would rather have a government that can pay it's bills even if it means one less trip to Taco Bell a week. Thank you...

Anonymous said...

I may be simplistic and/or ignorant, but isn't only common sense that if you TAKE IN less taxes that it DECREASES revenue. If not, I'm missing something.

TAO said...

Oh, for twenty years we have all missed something.

The Laffer Curve does propose that lower taxes CAN increase economic growth and spur increased tax revenues. BUT IT IS A CURVE and it also shows that taxes that are TOO low also curb economic growth and can lower tax revenues.

But the Laffer Curve also ASSUMES a balanced budget, where government does not spend more than it takes in.

That is why taxes that are too low can curb economic growth because it is obvious that government SPENDING also is a big factor in economic growth.

Of course Laffer gets on Kudlows show and TOTALLY forgets his own assumptions....

Then you have the totally unrelated issue of tax policy (progressive vs regressive) and so on and so forth.

Its kind of like McCain pointing at GROSS tax rates for corporations and comparing it with NET tax paid by individuals....

Spin and lies....

Or allowing a 7,500 tax credit to individuals who buy their own health insurance but allowing corporations to expense the total cost of their health insurance expenditures from their gross earnings....

Spin and lies....

Ruth said...

The Fundamentals are sound! that was also contended by the wingers right up until three quarters of meltdown made it impossible to avoid admitting we were in at least a recession.

Time said...

Nobody WANTS to pay more taxes. It's political pandering to run on a "No New Taxes" pledge.

Smaller government, lower taxes, less regulation, etc.... sounds great, but the Republicans have NEVER done that.

Ike never did it, Nixon never did it, Reagan never did it, neither did Bush 1 or 2.

What's so wrong about paying to be the best country in the World?

If we give tax breaks to a small business right now, do you think they will really hire more employees? How could they justify that move, given their business is down, and consumers are staying at home?

Haven't we proven by now, that trickle down economics is a sham. It doesn't work. We have tried it many times.

If we pay our bills as we go along the budget will be fine, healthy, and that will keep the capitalistic system humming.

What has happened here is a practice of bad capitalism.

If we move towards socialism it is because we as individuals can not afford things like health care, we have to buy it en mass.

We should take health care costs off the backs of our employers. But we still have to compete with companies around the World that pay their employees 80% less than what an American worker makes.

We have to raise the level of pay and benefits for workers around the World, not lower ours.

libhom said...

Tax cuts slow the economy. It's a dirty secret the corporate media won't tell us.

Bob Rainey said...

The CBO says that George W. Bushes tax cut did in fact increase revenue. The CBO also says that the rich assumed a greater percentage of the tax burden because of the same temporary tax cuts.

Now, with wealth creation slowed greatly, Democrats want to increase taxes on the only people that can get us out of this mess, namely the entrepreneurs of this country?

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