WSJ: Tax Cut Dividends - Dispensing the claim that tax cuts benefited only the yacht-owner class

Wall Street Journal ^ | August 17, 2005 | Editorial

[OESY]

...[T]he Congressional Budget Office has now confirmed that federal revenues will rise this year by more than $262 billion-- the largest single-year increase in tax revenues in American history....

The first is that this windfall means that tax revenue as a share of the economy is climbing back to normal levels. As the nearby chart shows, at 17.5% of GDP this year, Uncle Sam's tax take is close to the 17.9% postwar average. And CBO estimates that as the economy continues to grow, the tax take will slowly rise throughout this decade to 17.8%.

This is because more Americans are thrown into higher tax brackets as their incomes rise. Economists call this "real bracket creep," and what it means is that most taxpayers will see their tax burdens gradually rise even under the lower Bush rates of 2003. The burden will be that much higher still if the lower Bush rates are allowed to expire....

A second fact: CBO says the deficit will fall to 2.7% of national output in the fiscal year that ends at the end of next month. It is expected to continue to fall to 2.4% of GDP next year and 2.0% in 2010....

The official numbers aren't in yet, but most fiscal analysts believe a large share of this year's revenue gusher is coming from higher than expected capital gains and dividend tax receipts. Non-withheld personal income tax receipts-- much of which is from capital gains and dividend income-- have exploded by one-third since 2003. This suggests that the lower tax rates on investment income may have paid for themselves.

[T]otal wage income is up about $75 billion this year over projections. This is partly a result of higher productivity and wage growth, and partly a result of two million new jobs... this year....

[OESY]

[VRWCmember]

It's Bush's fault.

[NonValueAdded]

Let's not forget Patrick Kennedy's embrace of the "yacht class" as the failed luxury tax devistated the yacht-building industry and PK actually filed legislation to give incentives to the wealthy to buy yachts. He discovered that the construction of a single yacht meant employment for 1,000 of his constituents. That would be more votes than the machine could overcome. reference

[chaosagent]

bookmark

[Alberta's Child]

A second fact: CBO says the deficit will fall to 2.7% of national output in the fiscal year that ends at the end of next month. It is expected to continue to fall to 2.4% of GDP next year and 2.0% in 2010.

Since the Federal appropriations for the war efforts in Afghanistan and Iraq are being done "off-line" and are not included in these budget figures, I'd say these CBO estimates are absolutely meaningless. The Wall Street Journal ought to know this better than anyone.

[goldstategop]

For the MSM, good news is no news. Its the old joke about a tree falling in the forest and no one hears it. We're asked to believe if we return to liberal policies, we'll get a balanced budget and the Happy Days of the 90s will be back again.

(Denny Crane: "Sometimes you can only look for answers from God and failing that... and Fox News".)