TAX CUTS DO NOT PAY FOR THEMSELVES

It's a historical fact that borrowing money to fund huge tax cuts, military buildups, and wars has drastically increased the National Debt and exacerbated the Income Tax Inequality since Reagan took office in 1981! Many fact-check links to government documents, including page numbers, are provided to show that the numbers presented here are real!

GOP RECORD ON TAX CUTS AND THE ECONOMY

President Bush inherited a $236 BILLION SURPLUS from President Clinton and then eight years later on January 20th, 2009 handed President Obama the worst recession since the Great Depression and a Congressional Budget Office projected $1.2 TRILLION DEFICIT (-8.5% GDP) for Fiscal Year 2009 in this January 2009 report page 11 that came out before the inauguration. This was the largest increase in deficit since World War II and much worse than the 1934 deficit of -5.9% GDP at the height of the Great Depression.

Under Bush, Republicans borrowed money to fund large tax cuts while the country was fighting two costly wars, running up huge National Debt. After six years of almost total Republican control of the Federal Government from January 2001 to January 2007, the U.S. ended up with an economic disaster, soaring debts, and millions of job losses. The sad truth is every single penny of the so-called "Tax Cuts" since Reagan took office in 1981 has been "Borrowed Debt" for the future generations to pay back.

U.S. National Debt, Surpluses, Deficits, and Tax Rate Charts 1910 - Present
Sources

Only TWICE in the past 100 years have the Republicans had control of the White House, the Senate, and the House at the same time for MORE THAN TWO YEARS, resulting in the two worst economic disasters during this period:

The Great Depression 1929-39: The GOP ran all three branches of the Federal Government from January 1921 to January 1931, cutting the Top Income Tax rate to 25% and the Corporate and Capital Gains rates to around 12%. With banking regulations practically nonexistent, the Great Depression started 9 years later in 1929. After the Great Crash of 1929, the Republicans under Hoover did little to rescue the economy, allowing a deep recession to snowball into the Great Depression.

The Great Recession 2007-present: The GOP once again ran the Federal Government for MORE THAN TWO YEARS from January 2001 to January 2007, borrowing money to lower the Top Income and Corporate Tax rates to 35% and cutting the Capital Gains rate to 15.7%. With most of the banking regulations put in place since the Great Depression systematically removed, the worst recession since the Great Depression started in 2007, and millions of Americans are still struggling today.

The two worst economic disasters in the past 100 years happened when taxes and banking regulations were at or near the lowest levels, yet the Republicans are still pursuing the same economic policies, seeking to borrow money to fund more tax cuts and to reduce the banking regulations put in place since Bush left office - the banking regulations aim to prevent another financial disaster.


INCOME TAX INEQUALITY

Billionaire Warren Buffett wrote an article titled Stop Coddling the Super-Rich, in which he argued against giving extraordinary tax breaks to the Mega-Rich while most Americans struggle to make ends meet. He pointed out that he paid a17.4% tax rate on $40 million TAXABLE EARNINGS while the 20 people in his office who made far less paid an average of 36%. In fact, Tax Policy Center report shows that 18,000 families or individuals with earnings over $500,000 paid no INCOME tax to the IRS in 2011.

The reason many people (not all) who make over $1 million a year pay far lower tax rates on their TAXABLE INCOME than their middle-class counterparts is because most of their earnings come from Capital Gains taxed at 15% and the rest from SALARY taxed at 35%. On the other hand, the majority of Americans earn mainly SALARY taxed at, for singles, 10% ($0-8K), 15% ($8-34K), 25% ($34-82K), 28% ($82-172K), 33% ($172-374K), and 35% ($374K+). So a person with $34,000 TAXABLE INCOME from SALARY will already pay a much higher tax rate, 25%, than the 17.4% Warren Buffett paid on $40 million TAXABLE INCOME.

INCOME TAX INEQUALITY WILL WORSEN UNDER GOP TAX PLAN

Paul Ryan's GOP Roadmap plans to eliminate the Capital Gains Tax completely and lower the Top Income rate to 25%. This will reduce Warren Buffett's overall tax rate from 17.4% down to an ESTIMATED 3% and cut Mitt Romney's to 0% if passed. Here's how these ROUGH ESTIMATES were calculated to illustrate the potential impact:

In order for Warren Buffett to pay 17.4% tax rate in 2009, no more than 12% of his TAXABLE INCOME could have been taxed at the Top Income rate of 35%:
(12% income from Salary X 35% Top Income Tax rate = 4.2%) + (88% income from Capital Gains X 15% Top Capital Gain rate = 13.2%) = 17.4% Buffett paid in 2009
(12% income from Salary X 25% Top Income Tax rate = 3.0%) + (88% income from Capital Gains will no longer be taxed = 0%) = 3% Buffett will pay under GOP Roadmap

In order for Mitt Romney to pay 13.9% tax rate in 2010, pretty much 0% of his TAXABLE INCOME could have been taxed at the Top Income rate of 35%:
(0% income from Salary X 35% Top Income Tax rate = 0%) + (100% income from Capital Gains X 15% Top Capital Gain rate = 15%) = 15% Romney paid 13.9% in 2010
(0% income from Salary X 25% Top Income Tax rate = 0%) + (100% income from Capital Gains will no longer be taxed = 0%) = 0% Romney will pay under GOP Roadmap

On the other hand, any taxpayer with $1 TAXABLE SALARY will pay a 10% tax rate.

GOP Income Tax Table: 10% (Single $0-$50,000) (Joint $0-$100,000) 25% (Single $50,000 and over) (Joint $100,000 and over)

GOP FOX NEWS MISLEADING CLAIM - HALF OF AMERICANS PAY NO TAXES

GOP Fox News has misleadingly claimed that "HALF OF AMERICANS PAY NO TAXES" when in fact 82% paid PAYROLL taxes (Social Security, Medicare, Unemployment) in 2011 and 54% paid INCOME tax based on Tax Policy Center report. Only 18% paid no PAYROLL and INCOME taxes in 2011.

Although 46% of Americans had no TAXABLE INCOME left in 2011 after taking eligible tax credits and deductions (family, education, Sales Tax, Property Tax, mortgage interests... etc.), majority of them held jobs and paid PAYROLL taxes. Tax Policy Center charts show who the 46% are:

- 28% of Americans who held low-paying jobs and paid only PAYROLL taxes - soldiers, minimum-wage earners... etc.
- 10% are elderly retirees living on Social Security they had paid into while working. They are not getting something for nothing.
- 7% are people with less than $20,000 incomes - students, veterans, people with disabilities… etc.
- 361,000 families or individuals with incomes between $100K-$200K.
- 54,000 families or individuals with incomes between $200K-$500K.
- 14,000 families or individuals with incomes between $500K-$1 million.
- 4,000 families or individuals with incomes over $1 million.

The U.S. Census shows that the 10 states with the highest percentages of "non-payers" are:
- Alabama
- Arkansas
- Florida - state with the highest retiree population
- Georgia
- Idaho
- Louisiana
- Mississippi
- New Mexico
- South Carolina
- Texas

CORPORATE INCOME TAX LOOPOLES

Using overseas tax shelters to hide U.S. profits, G.E. paid no taxes to the IRS in 2009 on $10.8 billion worldwide profit and did it again in 2010 on $14 billion worldwide earnings. Exxon Mobil also paid no taxes to the IRS in 2009 on a record $45.2 billion worldwide profit.

GOP Roadmap plans to replace the Corporate Income Tax, currently topping at 35%, with a substantially lower 8.5% Business Consumption Tax. The Corporate Income Tax generated an estimated $201 billion federal revenue in 2011. No details are available to estimate how much revenue the 8.5% Business Consumption Tax will bring in.


REPUBLICAN ROADMAP

Despite the fact that the country is facing a projected $1 trillion deficit this year, the Republicans seek to pass more than $400 billion worth of new tax cuts. Here's the list posted on the House-Republican web site:

GOP ROADMAP: Tax Cut / Revenue Estimated Tax Cut / Revenue per year Sources: CBO 2011 Report
Eliminate Capital Gains Tax (Top @ 15%) $ 48 billion (based on 2011 $48 billion CBO-projected Capital Gains receipt) Page 93
Lower Income Tax almost 30% $240 billion (based on only 25% of the 2011 CBO-projected Income Tax receipt from Salary) Page 92
Eliminate Corporate Income Tax (Top @ 35%) $201 billion (based on 2011 $201 billion CBO-projected Corporate Tax receipt) Page 87
Create 8.5% Business Consumption Tax Not enough details or historical data to estimate the revenue  

GOP Income Tax Table: 10% (Single $0-$50,000) (Joint $0-$100,000) 25% (Single $50,000 and over) (Joint $100,000 and over)

To pay for these new tax cuts and reduce the ballooning National Debt as a direct result of Republican's "Borrow-Money-To-Fund-Tax-Cuts-&-Wars” economic policies, the GOP wants to eliminate the Department of Education or reduce it substantially, cut education programs, fire countless poor- to- middle-class workers, cut funding to Medicaid, and turn Medicare into a voucher program.


WAKE UP PEOPLE!

Think about it. What kind of FAMILY VALUE is it, voting for TAX CUTS 100% borrowed and then force your own children to pay back the debt + interests! What kind of PATRIOTISM is it, supporting going to war in Iraq, spending over $1 trillion, chasing weapons of mass destruction, nation building, and then refuse to pay for the war, passing the TOTAL costs to the children generation and ruining the U.S. economy! What kind of RELIGIOUS VALUE is it, reducing aids to the poor to fund tax cuts to the Super-Rich!

TAX CUTS sound great, but not if they are borrowed debts. WAKE UP PEOPLE!

Actions and records speak louder than political spins and partisan attacks so FACT CHECK, STAY INFORMED, and VOTE SMART!


U.S. Government figures in millions of dollars:

Sources WH Tables   Treasury Tables   WH Tables IRS IRS IRS        
Year Surplus/Deficit % of GDP National Debt % of GDP GDP Income Corporate Capital Gains President S H Major Economic Events
1901 63 0.28% 2,143 9.57% 22,400       McKinley R R  
1902 77 0.32% 2,158 8.92% 24,200       R R R  
1903 45 0.17% 2,202 8.47% 26,000       R R R  
1904 -43 -0.17% 2,264 8.78% 25,800       R R R  
1905 -23 -0.08% 2,274 7.87% 28,900       R R R  
1906 25 0.08% 2,337 7.56% 30,900       R R R  
1907 87 0.26% 2,457 7.25% 33,900       R R R Contraction
1908 -57 -0.19% 2,626 8.70% 30,200       T. Roosevelt R R  
1909 -89 -0.28% 2,639 8.20% 32,200       R R R  
1910 -18 -0.05% 2,652 7.94% 33,400       R R R  
1911 11 0.03% 2,765 8.06% 34,300       R R D  
1912 3 0.01% 2,868 7.67% 37,400       Taft R D  
1913 -1 0.00% 2,916 7.46% 39,100 7% 1%   D D D  
1914 -1 0.00% 2,912 7.98% 36,500 7% 1%   D D D Start of World War I
1915 -63 -0.16% 3,058 7.90% 38,700 7% 1%   D D D  
1916 48 0.10% 3,609 7.28% 49,600 15% 2% 15% D D D  
1917 -853 -1.43% 5,717 9.58% 59,700 67% 6% 67% D D R  
1918 -9,032 -11.92% 14,592 19.25% 75,800 77% 12% 77% D D R End of World War I. Start of Recession
1919 -13,363 -17.07% 27,390 34.98% 78,300 73% 10% 73% D R R  
1920 291 0.33% 25,952 29.36% 88,400 73% 10% 73% Wilson R R  
1921 509 0.69% 23,977 32.58% 73,600 73% 10% 73% R R R End of Recession
1922 736 1.00% 22,963 31.28% 73,400 58% 12.5% 12.5% R R R  
1923 713 0.83% 22,349 26.17% 85,400 50% 12.5% 12.5% Harding R R  
1924 963 1.11% 21,250 24.45% 86,900 46% 12.5% 12.5% R R R  
1925 717 0.79% 20,516 22.64% 90,600 25% 13% 12.5% R R R  
1926 865 0.89% 19,643 20.27% 96,900 25% 13.5% 12.5% R R R  
1927 1,155 1.21% 18,511 19.38% 95,500 25% 13.5% 12.5% R R R  
1928 939 0.96% 17,604 18.07% 97,400 25% 12% 12.5% Coolidge R R  
1929 734 0.71% 16,931 16.34% 103,600 25% 11% 12.5% R R R Start of Great Depression
1930 738 0.76% 16,185 16.62% 97,400 25% 12% 12.5% R R R  
1931 -462 -0.55% 16,801 20.05% 83,800 25% 12% 12.5% R R D  
1932 -2,735 -4.05% 19,487 28.83% 67,600 63% 13.75% 12.5% Hoover R D  
1933 -2,602 -4.52% 22,538 39.13% 57,600 63% 13.75% 12.5% D D D  
1934 -3,586 -5.86% 27,053 44.20% 61,200 63% 13.75% 31.5% D D D  
1935 -2,803 -4.03% 28,700 41.24% 69,600 63% 13.75% 31.5% D D D  
1936 -4,304 -5.48% 33,778 43.03% 78,500 79% 15% 39% D D D  
1937 -2,193 -2.50% 36,424 41.49% 87,800 79% 15% 39% D D D  
1938 -89 -0.10% 37,164 41.76% 89,000 79% 19% 30% D D D  
1939 -2,846 -3.19% 40,439 45.39% 89,100 79% 19% 30% D D D Start of WW II. End of Great Depression
1940 -2,920 -3.02% 42,967 44.39% 96,800 79% 24% 30% D D D  
1941 -4,941 -4.33% 48,961 42.91% 114,100 81% 31% 30% D D D Pearl Harbor
1942 -20,503 -14.21% 72,422 50.19% 144,300 88% 40% 25% D D D  
1943 -54,554 -30.26% 136,696 75.82% 180,300 88% 40% 25% D D D  
1944 -47,557 -22.73% 201,003 96.08% 209,200 94% 40% 25% D D D  
1945 47,553 21.48% 258,682 116.84% 221,400 94% 40% 25% F.D.Roosevelt D D End of World War II
1946 -15,936 -7.16% 269,442 120.99% 222,700 91% 38% 25% D D D  
1947 4,018 1.72% 258,286 110.76% 233,200 91% 38% 25% D R R  
1948 11,796 4.61% 252,292 98.55% 256,000 91% 38% 25% D R R  
1949 580 0.21% 252,770 93.24% 271,100 91% 38% 25% D D D  
1950 -3,119 -1.14% 257,357 94.27% 273,000 91% 42% 25% D D D Start of Korean War
1951 6,102 1.90% 255,221 79.61% 320,600 91% 50.75% 25% D D D  
1952 -1,519 -0.44% 259,105 74.33% 348,600 92% 52% 25% Truman D D  
1953 -6,493 -1.74% 266,071 71.35% 372,900 92% 52% 25% R R R End of Korean War. Recession
1954 -1,154 -0.31% 271,259 71.89% 377,300 91% 52% 25% R R R  
1955 -2,993 -0.76% 274,374 69.53% 394,600 91% 52% 25% R D D  
1956 3,947 0.92% 272,750 63.85% 427,200 91% 52% 25% R D D  
1957 3,412 0.76% 270,527 60.08% 450,300 91% 52% 25% R D D Recession
1958 -2,769 -0.60% 276,343 60.01% 460,500 91% 52% 25% R D D  
1959 -12,849 -2.61% 284,705 57.93% 491,500 91% 52% 25% R D D  
1960 301 0.06% 286,330 55.29% 517,900 91% 52% 25% Eisenhower D D Start of Vietnam Involvement. Recession
1961 -3,335 -0.63% 288,970 54.44% 530,800 91% 52% 25% D D D  
1962 -7,146 -1.26% 298,200 52.54% 567,600 91% 52% 25% D D D  
1963 -4,756 -0.79% 305,859 51.09% 598,700 91% 52% 25% Kennedy D D  
1964 -5,915 -0.92% 311,712 48.67% 640,400 77% 50% 25% D D D  
1965 -1,411 -0.21% 317,273 46.18% 687,100 70% 48% 25% D D D Major US Deployment in Vietnam
1966 -3,698 -0.49% 319,907 42.49% 752,900 70% 48% 25% D D D  
1967 -8,643 -1.06% 362,220 44.62% 811,800 70% 48% 25% D D D  
1968 -25,161 -2.90% 347,578 40.11% 866,600 70% 52.8% 26.9% Johnson D D  
1969 3,242 0.34% 353,720 37.29% 948,600 70% 52.8% 27.5% R D D  
1970 -2,842 -0.28% 370,918 36.64% 1,012,200 70% 49.2% 32.2% R D D  
1971 -23,033 -2.13% 398,129 36.87% 1,079,900 70% 48% 34.2% R D D  
1972 -23,373 -1.98% 427,260 36.26% 1,178,300 70% 48% 36.5% R D D  
1973 -14,908 -1.14% 458,141 35.04% 1,307,600 70% 48% 36.5% R D D Start of Oil Crisis
1974 -6,135 -0.43% 475,059 33.01% 1,439,300 70% 48% 36.5% Nixon D D  
1975 -53,242 -3.41% 533,189 34.16% 1,560,700 70% 48% 36.5% R D D End of Vietnam War. End of Oil Crisis
1976 -73,732 -4.25% 620,433 35.73% 1,736,500 70% 48% 39.9% Ford D D  
1977 -53,659 -2.72% 698,840 35.40% 1,974,300 70% 48% 39.9% D D D  
1978 -59,185 -2.67% 771,544 34.80% 2,217,000 70% 48% 39% D D D  
1979 -40,726 -1.63% 826,519 33.05% 2,500,700 70% 46% 28% D D D  
1980 -73,830 -2.71% 907,701 33.29% 2,726,700 70% 46% 28% Carter D D Start of Recession
1981 -78,968 -2.59% 997,855 32.67% 3,054,700 70% 46% 23.7% R R D  
1982 -127,977 -3.97% 1,142,034 35.38% 3,227,600 50% 46% 20% R R D End of Recession
1983 -207,802 -6.04% 1,377,210 40.03% 3,440,700 50% 46% 20% R R D  
1984 -185,367 -4.83% 1,572,266 40.94% 3,840,200 50% 46% 20% R R D  
1985 -212,308 -5.13% 1,823,103 44.02% 4,141,500 50% 46% 20% R R D  
1986 -221,227 -5.01% 2,125,302 48.17% 4,412,400 50% 46% 20% R R D  
1987 -149,730 -3.22% 2,350,276 50.58% 4,647,100 38.5 40% 28% R D D  
1988 -155,178 -3.10% 2,602,337 51.96% 5,008,600 28% 34% 28% Reagan D D  
1989 -152,639 -2.83% 2,857,430 52.91% 5,400,500 28% 34% 28% R D D  
1990 -221,036 -3.85% 3,233,313 56.37% 5,735,400 28% 34% 28% R D D  
1991 -269,238 -4.54% 3,665,303 61.76% 5,935,100 31% 34% 28.9% R D D Gulf War. Recession
1992 -290,321 -4.65% 4,064,620 65.14% 6,239,900 31% 34% 28.9% Bush D D  
1993 -255,051 -3.88% 4,411,488 67.09% 6,575,500 39.6% 35% 29.2% D D D  
1994 -203,186 -2.92% 4,692,749 67.41% 6,961,300 39.6% 35% 29.2% D D D  
1995 -163,952 -2.24% 4,973,982 67.90% 7,325,800 39.6% 35% 29.2% D R R  
1996 -107,431 -1.40% 5,224,810 67.91% 7,694,100 39.6% 35% 29.2% D R R  
1997 -21,884 -0.27% 5,413,146 66.16% 8,182,400 39.6% 35% 21.2% D R R  
1998 69,270 0.80% 5,526,193 64.05% 8,627,900 39.6% 35% 21.2% D R R  
1999 125,610 1.38% 5,656,270 61.98% 9,125,300 39.6% 35% 21.2% D R R  
2000 236,241 2.43% 5,674,178 58.44% 9,709,800 39.6% 35% 21.2% Clinton R R  
2001 128,236 1.25% 5,807,463 56.80% * 10,225,300 39.1% 35% 21.2% R B R 911. Contraction
2002 -157,758 -1.50% 6,228,235 59.07% 10,543,900 38.6% 35% 21.2% R D R Start of Afghan War
2003 -377,585 -3.44% 6,783,231 61.78% 10,979,800 35% 35% 16.1% R R R Start of Iraq War
2004 -412,727 -3.53% 7,379,052 63.15% 11,685,600 35% 35% 16.1% R R R  
2005 -318,346 -2.56% 7,932,709 63.74% 12,445,700 35% 35% 16.1% R R R  
2006 -248,181 -1.88% 8,506,973 64.33% 13,224,900 35% 35% 15.7% R R R  
2007 -160,701 -1.16% 9,007,653 64.84% 13,891,800 35% 35% 15.7% R D D Start of Great Recession
2008 -458,553 -3.19% 10,024,724 69.64% 14,394,100 35% 35% 15.4% Bush D D Start of Global Financial Crisis
2009 -1,412,688 -9.80% 11,909,829 82.63% ** 14,413,600 35% 35% 15% D D D  
2010 -1,294,373 -8.75% 13,561,623 91.69% 14,791,400 35% 35% 15% D D D  
2011 -1,299,593 -8.45% 14,790,340 96.12% 15,387,100 35% 35% 15% D D R  
2012 -1,086,963 -6.75% 16,066,241 99.83% 16,094,200 35% 35% 15% D D R  
2013 -679,502 -4.09% 16,738,000 100.72% 16,618,600 35% 35% 15% D D R  
2014                 D D R  
2015                 D    
2016                 Obama  
2017                    
Year Surplus/Deficit % of GDP National Debt % of GDP GDP Income Corporate Capital Gains President S H Major Economic Events
Sources WH Tables   Treasury Tables   WH Tables IRS IRS IRS        

Sources:
Surplus/Deficit: page 21-23 of the White House document Historical Tables
National Debt: U.S. Department of the Treasury Historical Debt Tables
Historical numbers receive minor updates yearly; however, the tiny changes won't alter the graphs in any noticeable way:
Historical numbers prior to FY2001: GDP page 24-25, Surplus/Deficit page 21-22 of the White House document 2009 Historical Tables
* Historical numbers from 2001-2008: GDP page 25, Surplus/Deficit page 22 of the White House document 2012 Historical Tables
** Historical numbers from 2009-2014: GDP page 27, Surplus/Deficit page 24-25 of the White House document 2015 Historical Tables
 
 

Copyright © 1999-2014 Albert Yu. All rights reserved.