A Tale of Two Tax Cuts: Obama's Will Save Economy, Bush's for the 'Wealthiest'
Who doesn’t like to see taxes cut? Well, it depends on who gets the cut.
A Dec. 28 “NBC Nightly News” segment about President-elect Barack Obama’s incoming administration took on the issue of the “top domestic concern, the economy.” According to NBC News correspondent Savannah Guthrie, tax cuts would be a big part of the plan, citing Obama adviser David Axelrod from a Dec. 28 interview on NBC’s “Meet the Press.”
Who doesn’t like to see taxes cut? Well, it depends on who gets the cut.
A Dec. 28 “NBC Nightly News” segment about President-elect Barack Obama’s incoming administration took on the issue of the “top domestic concern, the economy.” According to NBC News correspondent Savannah Guthrie, tax cuts would be a big part of the plan, citing Obama adviser David Axelrod from a Dec. 28 interview on NBC’s “Meet the Press.”
“The president-elect today in
Guthrie showed little skepticism of the Obama plan, which some critics claim is a proposal to redistribute wealth through the tax code, and even cited another Obama adviser’s op-ed in the Dec. 28 Washington Post.
“Aides say it won’t be tax rebates like the stimulus checks that went out earlier this year, but likely a temporary cut in income taxes to take effect immediately,” Guthrie said. “In today’s Washington Post, incoming chief economic adviser Lawrence Summers wrote, ‘In this crisis, doing too little poses a greater threat than doing too much.’”
However, at the end of the segment, “Nightly News” fill-in anchor Amy Robach asked Guthrie what Obama intended to do about the Bush tax cuts, which she alleged were for the wealthy Americans.
“And Savannah, we know Obama has promised to roll back the Bush tax cuts on the wealthiest Americans – in effect, raising taxes on people in that highest income tax bracket,” Robach said. “Is that still his plan?”
Guthrie agreed, saying that was part of the plan, but that details were vague as to when the Obama administration would “get rid” of them.
“Well, it is,” Guthrie answered. “There’s no question they want to get rid of these tax cuts for the wealthiest of Americans. The only issue now is when. Do they try to get in there in January or early on and repeal the tax cuts or do they let them expire naturally, which mean they would go away in two years? That's the issue they’re working on right now.”
The notion that the Bush tax cuts somehow give an unfair advantage to the “wealthiest of Americans” is a myth according to The Heritage Foundation. Despite lowering the actual tax rate for the top income earners, the Bush cuts actually increased their overall burden, while lowering the burden of lower income earners, according to a 2007 study.
“Consequently, from 2000 to 2004, the share of all individual income taxes paid by the bottom 40 percent dropped from zero percent to –4 percent, meaning that the average family in those quintiles received a subsidy from the IRS,” Brian M. Riedl wrote in the Heritage backgrounder. “By contrast, the share paid by the top quintile of households (by income) increased from 81 percent to 85 percent.”
“Expanding the data to include all federal taxes, the share paid by the top quintile edged up from 66.6 percent in 2000 to 67.1 percent in 2004, while the bottom 40 percent's share dipped from 5.9 percent to 5.4 percent. Clearly, the tax cuts have led to the rich shouldering more of the income tax burden and the poor shouldering less.”
