The Economy: Extending the Bush Tax Cuts
What Bush Said: President Bush called on Congress to extend his big tax cuts, which otherwise expire in 2010. Unless Congress acts, Bush said, most of the tax relief Congress and the White House have delivered during his two terms will be taken away. He said that some in Washington would argue that letting tax breaks expire does not constitute a tax hike. But he said, "Try explaining that to the 116 million American taxpayers who would see their taxes rise by an average of $1,800."
Analysis: That $1,800 average is misleading. The president's tax cuts are heavily weighted toward the wealthy, and they'll lose much more than "average taxpayers," or taxpayers in the middle-income brackets, if the tax cuts are not made permanent. Citizens for Tax Justice, a liberal Washington watchdog group, estimates that over the 10 years from 2001 to 2010, the top 1 percent of taxpayers will receive more than $30,000 a year in tax relief from the Bush tax cuts, while the middle 20 percent will receive about $540 a year.
Outlook in Congress: Because Congress is under Democratic control, there is virtually no chance that all of the Bush tax cuts will be extended this year. Democrats have talked about, at some point, extending some of the tax cuts that are targeted at the middle class. On another note, this week, Congress is expected to take up an economic stimulus package crafted by House leaders and the White House.
On the Campaign Trail: The Democratic presidential candidates agree with the approach of keeping tax cuts that favor the middle class. Republicans running for president line up with President Bush and insist that extending the tax cuts is necessary for the long-term health of the economy.
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