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One year later, Bush Administration's tax cuts not fulfilling job creation promises
The Bush Administration called the tax cut package, which was passed in May 2003 and took effect in July 2003, its "Jobs and Growth Plan." The president's economics staff, the Council of Economic Advisers (see background documents), projected that the plan would result in the creation of 5.5 million jobs by the end of 2004—306,000 new jobs each month, starting in July 2003. The CEA projected that, starting in July 2003, the economy would generate 228,000 jobs a month without a tax cut and 306,000 jobs a month with the tax cut. Thus, it projected that 3,672,000 would be created over these last 12 months, the first year after the tax cuts took effect. In fact, since the tax cuts took effect, there are 2,230,000 fewer jobs than the administration projected would be created by enactment of its tax cuts. As can be seen in the chart below, job creation failed to meet the administration's projections in 10 of the past 12 months.
Originally posted by Nerdling
Figures are from: www.nationmaster.com...
Lets look at Europe's Unemployment Rate 2001-2002:
With the exception of the Scandanavian countries, (and the Swiss) the economic powerhouses of Europe are sporting a much higher rate than the US. The UK is pretty close. To blame Bush for the number of Unemployed is simply not correct.
In this figure we see the level of jobs created by each President since the 1970’s. Only in Reagans second term do we see a respectable increase in jobs. Those numbers are far eclipsed by Democratic Presidents of the age. The most troubling figure we see is that of George W Bush’s first and only term. With a decrease of 100,000 jobs after the 300,000 created by his predecessor.
"Has Kerry explained how he'd fund his ambitious agenda?"
Originally posted by Nerdling
- We must create jobs across the nation by offering tax cuts and incentives to business that wish to come to or stay in the United States.
- We must reduce middle-class taxe. Ninety-eight percent of all Americans and 99 percent of American businesses will get a tax cut under the Kerry-Edwards plan
- John Kerry will cut the deficit by HALF within his first 4 years in office.
- John Kerry will end corporate welfare and roll back the Bush tax cuts for the wealthiest Americans that do not benefit the majority.
The top statutory income tax rate has fallen to 39.1 percent and the total payroll tax rate has risen from 14 percent to 15.3 percent. If one knew these figures in 1984, almost all economists would have projected a sharp decline in taxes paid by the rich and an increase in those paid by the poor.
In fact, the data show that those in the bottom quintile are only paying about half what they did 20 years ago: 5.4 percent. This is down from 6.4 percent just the year before, owing to the Bush tax cut.
Those in the top quintile did pay a little less in 2001 than they did in 2000: 26.8 percent versus 28 percent. But this is still well above the average tax rate they paid in 1984. Interestingly, those at the very top saw virtually no cut at all, even though liberals constantly say that they got the lion's share of the 2001 tax cut. Between 2000 and 2001, those in the top 10 percent of households saw a drop from 29.7 percent to 28.6 percent and those in the top 5 percent saw a decline from 31.1 percent to 30.1, but those in the top 1 percent saw their effective tax rate virtually unchanged: 33.2 percent versus 33 percent.
All of those in the middle 3 quintiles paid less in 2001 than they paid in 1984. In other words, between 1984 and 2001 average tax rates for the wealthy substantially increased, while at least 80 percent of households paid considerably less. Progressivity rose as the wealthy now pay about 6 times more than the poor.
Looking at the share of taxes paid shows a similar pattern. From 1984 to 2001, those in the bottom quintile reduced their share of the total tax burden from 2.4 percent to 1.1 percent. Those in the top quintile saw their share rise from 55.6 percent to 65.3 percent. Among the ultra wealthy, the top 10 percent increased their share from 39.3 percent to 50 percent, the top 5 percent raised their share from 28.2 percent to 38.5 percent, and that of those in the top 1 percent went up from 14.7 percent to 22.7 percent.
In short, the poor paid half as much of the federal tax burden in 2001 as they did in 1984, while the rich paid about 50 percent more. Those in the middle paid about a third less.
- John Kerry will impose a real cap to keep spending in check
- And when John Kerry puts forward a new idea, he'll tell you how he's going to pay for it.
However an econometric analysis of the Kerry plan, released on April 16 by The Heritage Foundation, shows the negative effects of an increase in taxes for high-income taxpayers overwhelm the positive effects of making key elements of the Bush tax plan permanent for taxpayers with incomes under $200,000. The net effect, according to the study, is "a slower economy and job creation significantly below potential."
The analysis estimates the effects of the Kerry tax plan using a standard macroeconomic model of the U.S. economy. The analysis shows:
Employment growth under the Kerry plan recedes. Employment growth reflects the slower pace of economic activity. Under the Kerry plan, the annual rate of non-farm employment growth will be consistently below forecast each quarter for the 10 years following January 2005.
GDP slows. The nation's output of goods and services quickly drops below current forecasts under the Kerry plan, and growth remains slower throughout the next 10 years.
After-tax income shrinks. Income after taxes, or inflation-adjusted disposable personal income, is below baseline in each year of the forecast under the Kerry plan.
Savings plummet. Lower disposable personal income means the Kerry plan would bring lower personal savings.
Kerry Tax Plan
Kerry mixes tax cuts with tax increases in his proposed tax plan. Though many details remain to be announced by the Senator's tax team, the following appear to be principal, well-developed elements of his plan and were incorporated in the economic analysis of his proposals:
For taxpayers with incomes above $200,000, the tax benefits of policy changes from 2001 and 2003 no longer apply. Their first dollar is taxed at 15 percent rather than 10 percent, and their last dollar is taxed at 39.6 percent rather than 35 percent. Other anti-growth changes are also made.
While Kerry's campaign has been relatively silent on federal estate and gift taxes, the study assumes the senator will propose a halt to plans to expand the estate tax exemption amount and reduce the estate and gift tax rates, as well as repeal of the estate tax in 2010.
For individually filing taxpayers with incomes below $200,000, Kerry proposes to make several of the Bush tax cuts permanent. The senator would keep the 10 percent tax rate and the expanded tax bracket. He would make permanent marriage penalty reforms. And he would permit taxpayers earning less than $200,000 to keep the $1,000 per child tax credit.
The senator provides additional tax cuts to cover health care costs. For taxpayers with incomes below $200,000, Kerry proposes a health care tax credit for those who retire early and for those who are between jobs.
The net effect of these tax policy changes, not counting the negative economic feedback they would cause, is a net tax increase of $609 billion over the 10-year period beginning January 1, 2005.
Originally posted by crmanager
Raise taxes on the rich. Ok. Why? What is Rich? Is it 50K a year? Is it 200K?
What is the purpose on taxing these groups? By far the most tax already comes from the top %. So, are you raising because they "are just rich?"