"Congressional Budget Office: Expiration Of High-Income Bush Tax Cuts Would Have Little Effect On Economy"
Recent nonpartisan reports have shown that the Bush tax cuts for the rich — those on income above $250,000 — don’t boost the economy. Republicans have been none too pleased with those findings.
In fact, Senate Republicans helped quash a report from the Congressional Research Service that found tax cuts for the rich are more effective at spurring income inequality than economic growth. House Speaker John Boehner (R-OH) yesterday touted a methodologically-flawed report to defend the high-income tax cuts.
Today, the Congressional Budget Office gave the GOP one more piece of evidence to ignore. CBO updated its analysis of the scenarios that make up the so-called “fiscal cliff” and found that extending all of the tax cuts would boost the nation’s economy by “a little less” than 1.5 percent of gross domestic product. Extending all of the tax cuts other than the high-income Bush tax cuts, meanwhile, would boost the economy by 1.25 percent, CBO found:
Extending all expiring tax provisions other than the cut in the payroll tax and indexing the AMT for inflation—except for allowing the expiration of lower tax rates on income above $250,000 for couples and $200,000 for single taxpayers—would boost real GDP by about 1¼ percent by the end of 2013. That effect is nearly as large as the effect of making all of those changes in law and extending the lower tax rates on higher incomes as well (which CBO estimates to be a little less than 1½ percent, as noted above), primarily because the budgetary impact would be nearly as large (and secondarily because the extension of lower tax rates on higher incomes would have a relatively small effect on output per dollar of budgetary cost).
Republicans have ignored the previous studies showing that growth would hardly be affected by the expiration of the tax cuts for the wealthy. But in addition to those reports, evidence from the last 30 years shows that the GOP’s tax cut-ideology doesn’t boost growth: the economy has grown more absent the party’s supply-side economics than it has when Republicans are instituting new tax cuts for the rich.