Income tax cuts for the wealthy will liberate the U.S. economy to create jobs and generate revenue and shrink the deficit. That line has become a policy standard on the right and a talking point repeated on stumps all across the nation. It is a cornerstone of the GOP Ryan Budget plan being pushed on Capitol Hill. Yet analysis and statistics and personal anecdotes pile high and deep against that tack as an effective real-world national economic policy. GOP presidential candidate Tim Pawlenty, the former Minnesota governor who led the state down a path toward deficit swampland, is the latest to try to rework history to suit the tax-cut narrative. As Dave Weigel at Slate points out, Pawlenty’s recent big economic speech twists and turns and makes a dead stop at the Bush years, when “tax cuts for the wealthy” national budget policy went into full effect and revenues plummeted and the deficit skyrocketed and the economy withered.
Pawlenty points to the economic recoveries and expansions of the 1980s and 1990s, the first coming under Regan’s leadership and the other coming under “President Bill Clinton and a Republican Congress.”
“The thing is,” Writes Weigel, “both of those economic expansions followed on tax hikes.”
Pawlenty then talks about revenue and the deficit.
“In the 1980s revenues increased by 99 percent. In the 1990s revenues climbed high enough to balance the budget.”
Weigel shakes his head.
“But, look: The higher revenues came in after taxes were raised! Our experience since 1982 is that income tax cuts don’t actually increase revenue. See: the decade between 2000 and 2009, which Pawlenty does not mention here.”
Millionaire eScription founder Paul Egerman said he simply banked the $10 million he made from the Bush tax cuts. Frank Patitucci, CEO of NuCompass Mobility Services, says he used the millions he saved to travel. Dennis Mehiel, founder of U.S. Corrugated, Inc., said he used the money to pay Italians to make him a yacht. Dal LaMagna, founder of Tweezerman, said he did in fact expand the economy where he lives– by about three temporary freelance part-time carpentry and construction jobs. He put a yoga and dance studio in one home, had some guys fix up an old barn and somebody else lay a parking lot.
The Huffington Post reports today, the tenth anniversary of the Bush tax cuts, that the cuts added an estimated $1.7 trillion to deficits between 2001 and 2008. HuffPo quotes Center for Tax Justice President Bob McIntyre to say the Bush tax cuts will cost the government $5.5 trillion over the coming decade.
2012 candidates, please say you believe in income tax cuts for the wealthy as a way to support individual liberty and reward success; please don’t say you support them as a way to attack the deficit and expand the economy and create jobs.