In his health care joint address to Congress last night, President Obama said the following:
Add it all up, and the plan I’m proposing will cost around $900 billion over ten years — less than we have spent on the Iraq and Afghanistan wars, and less than the taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. cuts for the wealthiest few Americans that Congress passed at the beginning of the previous administration.
The 2001-03 tax cuts benefitted all taxpayers with taxable incomeTaxable income is the amount of income subject to tax, after deductions and exemptions. For both individuals and corporations, taxable income differs from—and is less than—gross income. , not just “the wealthiest few,” as the table below (taken from here) shows.
|
Pre-2001 Tax Bracket |
Post-2003 Tax Bracket |
|
15% |
10% |
|
N/A |
15% |
|
28% |
25% |
|
31% |
28% |
|
36% |
33% |
|
39.6% |
35% |
Every tax rate was reduced. Now, about half of the dollar savings from the tax cuts went to the top 10% of taxpayers (when you include various credits and other tax changes included as part of the packages), but that’s probably because the top 10% pay over 70% of all income taxes. Those on the left side of the aisle may disagree with that approach to tax cuts, preferring targeted relief for lower-income individuals, but it’s disingenuous to say that the 2001-03 tax cuts only went to “the wealthiest few.”
Two other questions I’ll leave to my colleagues and other commenters. Can we really call a tax cut a “cost” like a government program? Why or why not? The reference comes to the fact that entities like CBO and OMB estimate how much revenue is lost from tax changes, just as they estimate how much will be spent for a new government program. That’s valuable information, but doesn’t equating the two lead to some perverse public policy conclusions?
And how much will repealing part of the 2001-03 tax cuts really save? Is it really $900 billion over 10 years?
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