The ubiquitous argument from the wealth redistributionist-lefties is always that tax cuts primarily benefit the “rich” and will result in decreased tax revenue which will “increase the deficit.”
I wonder how much more empirical evidence so-called economists such as Robert Rubin and Paul Krugman need before they actually grasp a concept that any first year 17-year old college economics student should be able to grasp which is that supply side tax cuts are the best way to generate economic growth, create jobs, and increase tax dollars to the treasury.
As part of Bush’s 2003 investment tax cut package, capital gains was reduced from 20% to 15%.
Kennedy, Shumer, and Clinton all predicted economic disaster:
Not even close. Here’s what actually happened. This 25% reduction in the tax penalty on stock and other asset sales triggered a doubling of capital gains realizations, to $539 billion in 2005 from $269 billion in 2002. One influence was the increase in stock values over that time, thanks in part to the higher after-tax return on capital induced by the tax cuts.
Why did this occur? For the same reason tax cuts always spur economic growth and increased tax revenues:
But another cause for the windfall was almost certainly the “unlocking” effect from investors selling their existing asset holdings in order to realize some of their profits and pay taxes at the lower rate. They could then turn around and buy new assets, hoping for higher rates of return. This “unlocking” promotes the efficiency of capital markets by redirecting investment into new and higher value-added companies.
As for tax revenues to the federeal treasury to fund all the “earmarks”:
It also yields a windfall for the Treasury. In 2002, the year before the tax cut, capital gains tax liabilities were $49 billion at the 20% rate. They rose slightly to $51 billion in 2003, then surged to $71 billion in 2004, and were estimated by CBO to have reached $80 billion last year — all paid at the lower 15% rate. In short, the lower rate yielded more revenue.
This is exactly why when President Bush called on Congress to make his tax cut permanent the Dems sat on their hands.
Either they are impervious to hard empirical economic data which has demonstrated the efectiveness of supply side tax cuts or the elites are actively rooting against the economy in their inexorable quest to regain political power in the 06′ elections.
What does it say that one political party can only achieve success when America is weak internationally and economically at home?