Background on Bush Tax Cuts

End the Bush Tax Cuts for the Wealthy

In 2001 and 2003, the Bush Administration pushed through legislation that cut personal income tax rates, cut tax rates on capitol gains and dividends, and cut the federal estate tax on multi-millionaires. The bulk of these cuts, which will cost our nation $2.5 trillion by the end of 2010, went to the wealthiest households. In the next few months, Congress will debate what to do now as the tax cuts are scheduled to expire and revert to their pre-Bush levels by year’s end.

It's important for that debate to be well-informed, so Congress can enact policies that bring us the greatest shared prosperity. The way we see it: 

1. Public structures are the foundation upon which prosperity is built. Many wealthy people understand that schools, courts, roads, bridges and transportation systems all play a role in their own financial success. Every successful businessperson in this country is building his or her prosperity on the foundation of public structures our tax dollars make possible. It’s only fair that we are asked to give back to support those structures.


2. The Bush tax cuts were rooted in the failed trickle down policies of the past. Half of all the Bush tax cuts went to the top 5% of households, while the bottom 60% of households shared only 15% of the Bush tax cut crumbs between them. Instead of the promised trickle-down, we got stagnant wages for middle class Americans while the wealthy became fabulously wealthy. We now have the greatest economic disparity in wealth since just before the Great Depression.


FACTS & FIGURES



	History of Selected Bush Tax Cuts for the Wealthy (PDF - 116 KB)
	Distribution & Cost of Bush Tax Cuts (PDF - 536 KB)




3. At a time of mounting federal deficits, we can no longer afford such lavish cuts. The Bush Tax Cuts will cost us $2.5 trillion by the end of 2010, twice as much as the Iraq and Afghanistan wars combined. Even President Obama’s budget shows us in ten years we will not collect enough taxes to support our needs as a country. Ending the Bush tax cuts for the wealthiest is a necessary step toward reining in the deficit.


4. Public spending, not tax cuts, is the most effective strategy for creating jobs. With pressure to rein in deficit spending, Congress is increasingly forced to choose between spending cuts or tax increases. Public spending on schools, roads, buildings, public safety, and even unemployment benefits provide more economic stimulus, on a dollar-for-dollar basis, than tax cuts for the wealthy. That’s because a larger portion of tax cuts go to paying down debt (noble as that may be, it doesn’t create jobs), savings, or overseas investments that don’t help our national economy or create needed jobs.


5. Taxes are not charity. They are part of our shared contract as citizens of this country. Achieving big things requires us to pool resources through our tax system. Individual charitable giving cannot build a road or defend a nation. Even if hundreds of people gave their tax savings back to the treasury, it wouldn’t fundamentally change things. We are all citizens of the same nation and we need to share the responsibility of supporting it, especially high-wealth individuals who have been the recipients of the wasteful Bush tax cuts for the last 10 years.

With the majority of tax cut provisions expiring at the end of 2010, the question remains - what will federal tax law look like in the future?

What UFE would like federal tax law to be in the future...