A new analysis by Pulitzer-Prize winning reporter David Cay Johnston, formerly of the New York Times, found that rather than boost the economy, the Bush tax cuts actually robbed each American taxpayer of $48,000 in pre-tax personal income during the twelve years of their existence, for a total of approximately $6.6 trillion dollars.
Nevertheless, Republicans at the federal and state levels are still demanding more tax cuts for the rich, despite that fact that tax cuts have never stimulated the economy as much as direct investment by the government. Now we have evidence that not only do tax cuts not help the economy, they actually cost the average American money—serious amounts of money.
That $6.6 trillion dollars the Bush tax cuts cost Americans is more than enough money to pay off every student loan, car loan, and credit card debt in the U.S. And, there would be an extra $2.4 trillion dollars in the pockets of Americans. This is the equivalent of an extra $11 dollars a day lost to each American taxpayer over the last twelve years. This adds up to serious cash.
In his analysis, Johnston analyzed rates of long term average personal incomes as reported by American taxpayers from 2000-2012, adjusting for inflation and population growth. In 10 of the 12 years when the Bush tax cuts were in effect, the average income shown on tax returns was lower than in 2000. In the two upside years, average income rose modestly, up $504 for 2006 and $1,744 for 2007. Total those 12 years and the net shortfall per taxpayer comes to $48,010.
Furthermore, to make matters worse, after twelve years of tax cut mania average real hourly wages are now 6% less than they were in 1972-1973, Johnson reports. Less than they were forty years ago. Where did the money go? It went to the top. This explains why Republicans push these policies so hard—to help the super rich oligarchs and billionaires who finance their campaigns.
Of the total increase in national income in 2012 over 2009, one-third went to just 16,000 wealthy households, and almost 95 cents of each dollar went to the top 1 percent, while the bottom 90 percent actually lost ground. The bottom 90 percent are worse off now than before Republicans enacted the Bush tax cuts.
The Bush tax cuts left an even more damaging legacy in the United States. They wiped out the prosperity gained during the previous decade. The budget surplus of the Clinton years was replaced by ever-growing deficits under the Bush administration, capped off with the worst recession since the Depression.
These austere budget cuts left governments—federal, state and local—with no means to sustain prosperity through government investment and infrastructure improvements. The results: Job growth fell far behind population growth. The median wage (half make more, half less) has been mired since 1998 at a bit more than $500 per week.
The problem was slightly mitigated when President Obama forced Congress to raise taxes on the very top income brackets. This has brought the deficit down, and resulted in 52 months of job growth. However, income disparity is still increasing, and there is still no money to invest in infrastructure and other things that would bring prosperity back to the bottom 99 percent. The top one percent is doing quite well and they like it this way, thank you very much.
When voters are tempted by the age-old Republican siren song of “tax cuts for the wealthy,” they should look at these sobering facts. They will see that tax cuts for the rich benefit only the rich, and everyone else pays—dearly.