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Thursday, December 8, 2011

Dexter: Payroll Tax Cuts v. Bush Tax Cuts

Bobby L. Dexter (Chapman), Payroll Tax Cuts v. Bush Tax Cuts: Real Relief for the Plumber and Other Average Joes:

Recent history has shown not only that the Bush Tax Cuts have produced soaring federal budget deficits but also that they have failed to enhance economic output and employment; more of the same simply enhances downside potential. Although many blindly insist that the Bush Tax Cuts be made permanent, experts contend that payroll tax cuts to employees are likely to prove far more effective at stimulating the economy. Furthermore, extension of payroll tax relief to specific employers would magnify the positive impact on the economy. Beyond those realities, payroll tax cuts offer relief to a very broad base of wage-earners. At the same time that the wealthiest Americans enjoyed considerable tax relief, workers suffered regular increases in the FICA Wage Base. Currently, taxpayers face a payroll tax rate hike in 2012 as well as an increase in the FICA Wage Base to $110,100. Although many lower-wage workers enjoyed a degree of Bush Tax Cut relief, a substantial percentage of those apparent savings were clawed back, in some instances, by notable increases on the payroll tax side; the wealthiest taxpayers managed to keep the lion’s share of their Bush Tax Cut savings. Vertical taxpayer equity dictates that payroll tax relief take clear precedence over any effort to extend ineffective and inefficient tax relief in the progressive rate structure.

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Comments

"Recent history has shown not only that the Bush Tax Cuts have produced soaring federal budget deficits but also that they have failed to enhance economic output and employment...."

This guy starts out with unsubstantiated talking points from MSNBC, Mother Jones, and David Cay Johnston.

Without the Bush tax *rates*, our economy would have been worse. The federal deficit results because of uncontrolled spending and earmarks.

More money from the private sector to the public sector takes away private investments for legitimate growth, and tax increases do not help the deficits because those increases are instantly spent by the politicians. Refer back to Reagan.

The Congressional Budget Office projected that the Bush tax rates would lower 2006 revenues by $75 billion, but they actually increased by $47 billion. In the eighteen months after the Bush tax rates went into effect, employment losses were reversed and 300,000 jobs added.

What we should be focusing on is the complete failure of government under the Obama administration to prove that government can make things better if we only borrowed, taxed, and spent more.

Posted by: Woody | Dec 8, 2011 3:14:53 PM

"Without the Bush tax *rates*, our economy would have been worse"

Who's making unsubstantiated points?

Posted by: anon | Dec 9, 2011 7:19:03 AM

Earmarks have no significant impact on the deficit. Do you even know what you're talking about?

Posted by: GaryD | Dec 9, 2011 11:26:11 AM

GDP consistently grew 1% per year slower over President Bush's term than his predecessor's. Next to the recession itself, the Bush tax cuts are the biggest driver of the deficits, dwarfing even the cost of our wars which are, of course, unfunded except through debt. Even the Bush-era Medicare prescription drug benefit, again, another unfunded entitlement program, doesn't compare to the deficit gap created by the Bush (now Bush-Obama) tax cuts.

Posted by: jim harper | Dec 9, 2011 11:49:51 AM

anon, if I was other than a commenter and writing an authoritative article to be published, I would have provided all the necessary support and footnotes. Authors who start off with the premise, "As everyone knows..." is already on shaky ground.

However, I did provide some information to substantiate that point, and you're welcome to verify it on your own. If you want me to, charges will be by the hour.

Posted by: Woody | Dec 9, 2011 12:09:20 PM

GaryD, earmarks represent spending on pork projects, which is spending waste that drives up the deficit. Do you have a better answer?

Posted by: Woody | Dec 10, 2011 5:29:25 PM

Typical liberal economist..talks about budget deficits and never mentions expenditures. Sir, please explain how taxes increase jobs or economic wealth...never mind, the answer is they don't... Let's let people solve their own problems and stop believing in fairy tales from liberals.

Posted by: Mark | Dec 17, 2011 8:05:41 AM