Still true, 10 months later: "Five myths about the Bush tax cuts"

[Contrary1]

AKA: What Republicans refuse to acknowledge.

Sunday, August 1, 2010

1. Extending the tax cuts would be a good way to stimulate the economy.

As a stimulus measure, a one- or two-year extension has one thing going for it -- it would be a big intervention and would provide at least some boost to the economy. But a good stimulus policy can't just be big; it should also offer a lot of bang for the buck. That is, each dollar of government spending or tax cuts should have the largest possible effect on the economy. According to the Congressional Budget Office and other authorities, extending all of the Bush tax cuts would have a small bang for the buck, the equivalent of a 10- to 40-cent increase in GDP for every dollar spent.

Why? As the CBO notes, most Bush tax cut dollars go to higher-income households, and these top earners don't spend as much of their income as lower earners. In fact, of 11 potential stimulus policies the CBO recently examined, an extension of all of the Bush tax cuts ties for lowest bang for the buck. (The CBO did not examine the high-income tax cuts separately, but the logic it used suggests that extending those cuts alone would have even less value.) The government could more effectively stimulate the economy by letting the high-income tax cuts expire and using the money for aid to the states, extensions of unemployment insurance benefits and tax credits favoring job creation. Dollar for dollar, each of these measures would have about three times the impact on GDP as continuing the Bush tax cuts.

2. Allowing the high-income tax cuts to expire would hurt small businesses.

One of the most common objections to letting the cuts expire for those in the highest tax brackets is that it would hurt small businesses. As Sen. Orrin Hatch (R-Utah) recently put it, allowing the cuts to lapse would amount to "a job-killing tax hike on small business during tough economic times."

This claim is misleading. If, as proposed, the Bush tax cuts are allowed to expire for the highest earners, the vast majority of small businesses will be unaffected. Less than 2 percent of tax returns reporting small-business income are filed by taxpayers in the top two income brackets -- individuals earning more than about $170,000 a year and families earning more than about $210,000 a year..."

http://www.washingtonpost.com/wp-dyn/content/article/2010/07/30/AR2010073002671.html

[Liberal_Stalwart71]

1. Thanks! RepubliCONS and some DemoCRAPs alike, refuse to recognize this! n/t

[BlueIris]

2. K&R.

And read the whole thing, people. Especially #5.

[hfojvt]

3. too bad then that it was Obama who ended up pushing for an extension

you might also add another myth

Myth #6 - Obama's original plan (the one that he will repeat for 2012) does NOT give most of its benefits to the wealthy.

what they really get under Obama's original plan

top 1% - 13.3%
top 5% - 26.5%
top 20% - 54.2%
bottom 60% - 26.4%

http://www.ctj.org/pdf/taxcompromise2010.pdf