George W. Bush on Tax Reform President of the United States, Former Republican Governor (TX)

Sub-sections under Tax Reform:
• Income Tax Cut
• Other issues under Tax Reform

Cut estate tax from 55% to 40%, and raised cutoff

Barack Obama rolled back some of these cuts, but many remained. Before George W. Bush was president, the estate tax applied to assets in excess of $2 million per couple, at a rate of 55 percent. By 2014, it applied only to assets in excess of $10 million per couple, at a 40 percent rate.

Meanwhile, the tax rate paid by America's wealthy on their capital gains--the major source of income for the non-working rich--dropped from 33 percent in the late 1980s to 23.8 percent.

Opposed supply-side argument for consumption-based flat tax

1989: temporary sales tax increase for new Rangers stadium

When I took over, the Rangers had finished with a losing record seven of the previous nine years. The club had posted a winning record four of our first five seasons.

I realized the best way to increase the long-term value of the franchise was to upgrade our stadium. The Rangers were a major league team playing in a minor league ballpark. We designed a public-private financing system to fund the construction of a new stadium. I had no objection to a temporary sales tax increase to pay for the park, so long as local citizens had a chance to vote on it. They passed it by a margin of nearly two to one.

In 2001, richest 1% paid $301B; by 2006 they paid $408B

By squelching economic activity & reducing consumer buying power, higher taxes hurt the economy, dry up commerce, and reduce tax revenues. Tax cuts do just the opposite: By adding to buying power, they add revenue. This isn't just theory. It's what has happened every time.

When George W. Bush cut taxes for the wealthiest Americans, he cut their tax rates--but the amount they paid rose sharply. Yes, that's right: Lower rates generated higher revenues. In 2001, before Bush's tax cuts took effect, the richest 1% of the country paid $301 billion a year in total taxes. By 2006, they were paying $408 billion a year. And the share of total tax payments by the richest tenth of the country rose from 65% before Bush's tax cuts to 71% in 2006.

So remember that mantra: Lower taxes produce higher revenue. It's one of the most powerful messages we have.

Death Tax scheduled to drop to zero in 2011

The problem with the Death Tax isn't how it affects families that own the wealth so much as how it impacts those who earn money to accumulate it. The tax itself is paid by only the top 2% of families. The Death Tax gives these wealthy Americans an incentive to hold their assets in cash. If a person dies with $10 million, and his estate has to pay the government 45% of the amount over $3.5 million, his heirs have to come up with approximately $3 million in a matter of months. If the funds of the deceased are in cash or a liquid asset, that's easy.

So the Death Tax creates an incentive NOT to invest money in one's business, but to keep it in things like houses and yachts and luxury goods--or cash and gold and bonds--that are easier to liquidate.

FactCheck: Expiring tax cuts typically cost $828, not $1,800

It is true that taxes would go up compared with what people pay now should all the tax cuts expire--we calculate an average increase of $1,713. But the AVERAGE increase would not be TYPICAL. The increase would be far smaller, $828, for “typical” middle-earners (income between $27,000 and $48,000 a year). And of course, the increase would be lower still for those with lower incomes. For more than 80% of taxpayers, the increase would be well below Bush’s “average” figure. But for the top 1% earners (with incomes over $435,000) the tax increase would be $64,154. That’s what pulls up the average to well above what ordinary taxpayers would experience

Make the tax cuts permanent

Re-examine the tax code from top to bottom

FactCheck: Kerry voted to increase taxes 39 times, not 98

Now the tax code is fairer after the tax cut

Kerry voted to increase taxes 98 times

KERRY: I have supported or voted for tax cuts over 600 times. I broke with my party in order to balance the budget, and Ronald Reagan signed into law the tax cut that we voted for. I voted for IRA tax cuts. I voted for small-business tax cuts.

BUSH: Kerry voted to violate the budget cap 277 times. You know, there’s a main stream in American politics and you sit right on the far left bank. As a matter of fact, your record is such that Ted Kennedy, your colleague, is the conservative senator from Massachusetts.

Will lead a bipartisan effort to simplify the tax code

Congress must act to make tax cuts permanent

Everyone benefits from dividend tax reform

Reduction in dividend taxes benefits 35 million people

Make the end of the death tax permanent

People should not pay more in taxes than they do for food

Be fair and eliminate death taxes for everyone

BUSH: Eliminate the death tax completely because people shouldn’t be taxed twice on their assets. It’s either unfair for some or unfair for all. I think if you’ve got tax relief, everybody benefits.

Don’t eliminate gas tax; ask OPEC to increase supply

Gore said, “I’m pleased that Saudi Arabia is proposing to increase production. I call on the big oil companies to let that pass through in the form of price reductions at the gasoline filling stations. What we need is not a trickle of relief, we need significant reduction.”

Use the marketplace to encourage people to save and invest

New Prosperity Initiative: 6 million tax-free families

To Reward Work [as part of the New Prosperity Initiative], Governor Bush’s tax reform plan will:
• Give the biggest percentage cuts to the lowest income earners, making the tax code more progressive.
• Help low-income families keep more of their earnings by creating a new, lower bottom rate of just 10%, and doubling the per-child credit to $1,000.
• Take 6 million families - one in five taxpaying families - off the income tax rolls.

End death tax; reduce marriage penalty; more child credits

Outlined a bold plan which:
• Doubles the child credit to $1,000
• Replaces the current five rate structure of 15, 28, 31, 36, and 39.6 percent with four, lower rates: 10, 15, 25, and 33 percent
• Expands the charitable deduction to non-itemizers
• Increases the annual contribution limit on Educational Savings Accounts from $500 to $5,000, and expanding them beyond college, down to Kindergarten
• Eliminates the death tax
• Restores the Reagan 10 percent deduction for two-income married couples, greatly reducing the marriage penalty
• Eliminates the Social Security earnings test
• Supports an extension of the moratorium on Internet sales taxation at least through 2004
• Opposes taxes on access to the Internet
• Would veto any increase in personal or corporate income tax rates

1997 no-tax pledge: judge results, despite breaking pledge

BUSH: I led my state, in 1997, to the largest tax cut in Texas history. I laid out a plan that cut $1 billion of property taxes.. I am a tax-cutting person.

FORBES: There was a lot of hedging about this pledge. The pledge was made in 1994. I have a copy of it here, promising not to raise the sales tax or to propose any kind of income tax. When he proposed this bill in 1997 it did have provisions in there for tax increases including increasing a sales tax. Pledges should not be lightly made and a pledge is a promise. Bush’s own staff admits that he broke the pledge. In 1998, I supported you & I would have voted for you. But you did break that pledge.

BUSH: [People] need to look at the results. That’s what’s important. The results are people from all walks of life received a substantial tax cut under me as the governor of Texas.

$8B tax incentives for charitable contributions

Read my tax pledge: No new taxes

Simplify tax code to stimulate economic growth

Did not prioritize on making Bush tax cuts permanent

Instead, Bush decided not to make the permanence of his tax cuts a legislative priority. Nominally, he asked Congress to do this. In reality, he put all his domestic emphasis on Social Security reform.

2001: Enough is enough; American people deserve tax relief

In 2001, the economy was lurching into recession and the federal government was taking a bigger share of the US economy in taxes than in any year since 1944. Adjusting for inflation, Washington collected twice as much income tax revenue in 2001 as it did in 1981. Bush summed up his view this way: "Enough is enough. The American people deserve tax relief." In response, Congress approved a tax relief package of $1.3 trillion.

Bush's support for tax cuts was grounded in three premises. First, he understood that money collected from the people belonged to them, not the government. Second, Bush knew that while government cannot create wealth, it can affect the environment in which entrepreneurs flourish and jobs are created. Third, Bush saw that tax cuts would create new jobs and ease the financial burdens of average Americans.

OpEd: Bush tax cuts led to decreased investment & savings

OpEd: Middle class get $54 from tax cut; top 1% get $191

Taxpayer dollars must be spent wisely or not at all

By making our economy more flexible, more innovative, and more competitive, we will keep America the economic leader of the world. America’s prosperity requires restraining the spending appetite of the federal government. I welcome the bipartisan enthusiasm for spending discipline.

The principle here is clear: Taxpayer dollars must be spent wisely or not at all.

FactCheck: Most of Bush tax cut went to top 10%

FACT CHECK: Bush could hardly have been farther off base when he said most of his tax cuts “went to low- and middle-income Americans.” That’s just not true. In fact, the nonpartisan Tax Policy Center recently calculated that most of the tax cuts-53% to be exact-went to the highest-earning 10% of US individuals and families. Those most affluent Americans got an average tax cut of $7,661. And as for the “low- and middle-income Americans” Bush mentioned-the bottom 60% of individuals and families got only 13.7% of the tax cuts, a far cry from “most” of the cuts as claimed by Bush.

FactCheck: Wealthy pay 63% of taxes, not 80%

FACT CHECK: The President came closer to the mark, but still got it wrong, when he said that the top 20% of earners pay “about 80% of the taxes in America today.” That’s incorrect. In fact, as we reported only that morning, the Congressional Budget Office calculates that the top 20% now pay 63.5% of the total federal tax burden, which includes income taxes, payroll taxes and other federal levies. It’s true that the top 20% pays nearly 81% of all federal income taxes, but the president spoke more expansively of “taxes in America,” not just income taxes.

Cut taxes on everybody

BUSH: Well look at the budget. One is to make sure Congress doesn’t overspend. But let me talk back about where we’ve been. The stock market was declining six months prior to my arrival. It was the largest stock market correction - one of the largest in history, which foretold a recession. Because we cut taxes on everybody - remember, we ran up the child credit by a thousand, we reduced the marriage penalty, we created the 10 percent bracket - everybody who pays taxes got relief.

KERRY: Most of the 2001 tax cut went to the wealthiest people in the country. Bush came and asked for a tax cut. We wanted a tax cut to kick the economy into gear. You know what he presented us with? A $25 billion give-away to the biggest corporations in America, including a $254 million refund check to Enron.

Ad: The largest tax relief in history

AD ANNOUNCER: After recession, 9-11 and war, now our economy has been growing for ten straight months.

• The largest tax relief in history.
• 1.4 million jobs added since August.
• Inflation, interest and mortgage rates low.
• Record homeownership.
• John Kerry’s response? He’s talking about the Great Depression.
• One thing’s sure... Pessimism never created a job.

ANALYSIS: This Bush ad on cable networks makes a questionable claim when it lists “the largest tax relief in history” amid Bush’s accomplishments. Bush’s cuts are indeed historically big. But whether they are bigger than Ronald Reagan’s depends on any number of assumptions. Reagan’s looks larger by several measures.

The campaign has taken a positive turn: with this ad, Bush paints himself as a bigger optimist than Kerry. He’s responding to a June 1 Kerry ad in which Kerry says, “We’re a country of optimists; we’re the can-do people.”

Tax relief is working

Americans took those dollars and put them to work, driving this economy forward. The pace of economic growth in the third quarter of 2003 was the fastest in nearly 20 years: new home construction, the highest in almost 20 years; homeownership rates, the highest ever. Manufacturing activity is increasing, inflation is low, interest rates are low, exports are growing, productivity is high, and jobs are on the rise.

These numbers confirm that the American people are using their money far better than government would have, and you were right to return it.

Fact Check: Tax relief fueled spending, but not job growth

BUSH: We have come through recession, and terrorist attack, and corporate scandals, and the uncertainties of war. And because you acted to stimulate our economy with tax relief, this economy is strong, and growing stronger.... And jobs are on the rise.

FACTCHECK: It is true that the economy grew last quarter at a yearly rate of 8.2%. And private economists are generally agreed that tax cuts helped propel the consumer spending that fueled the growth, which continues. Also true is that the economy has gained 278,000 jobs since July, when the job slump bottomed out. But what the President left unsaid is that in the most recent month the job gain was almost nonexistent-only 1,000-and that as of December total employment was still 2.3 million below where it stood when Bush took office.

Bush 2003 economic plan accelerates 2001 tax cuts

Tax relief allows saving & spending more of your own money

Deliver substantial tax relief to 91 million Americans

Married with children -- taxes drop 96%

Not too big, not too small, tax cut was just the right size

1. We have a big surplus.
2. We’re going to use some of it to increase spending on education and defense.
3. Then we’re going to use some more of it to repay debt.
4. And with the money left over, we’ll cut taxes. Thank you, and good night.

Bush signed his tax cut into law on June 7, 2001. Bush’s opponents could only fulminate as he sent all that lovely money out of Washington forever, out of their reach, back home to its owners.

On behalf of the American people, I’m asking for a refund

Unrestrained government spending is a dangerous road to deficits, so we must take a different path. The other choice is to let the American people spend their own money to meet their own needs.

You see, the growing surplus exists because taxes are too high and government is charging more than it needs. The people of America have been overcharged and on their behalf, I’m here asking for a refund. Some say my tax plan is too big, others say it’s too small. I respectfully disagree. This plan is just right.

Get bigger paychecks in people’s pockets fast

Bush says the tax cut is necessary to stave off a recession, and many Democrats agree, although some believe a smaller cut of less than $1 trillion over 10 years is in order. Bush warned of ”troubling“ economic signs as he pitched the tax-cut plan and Democrats responded that the proposal would disproportionately help the wealthy. The Democrats also argued that Bush’s tax cut and increased spending on improving schools, the military and Medicare would bring new deficits.

Retroactive tax cuts may bolster faltering economy

”I think the plan ought to not only fulfill the goals, which are reducing all marginal rates, simplifying the code, helping make sure the tax system is more fair to people at the bottom end of the economic ladder, getting rid of the death tax, doing something on the marriage penalty.“ But if it looked as though retroactive tax cuts would help a faltering U.S. economy, then Bush said he would ”make that decision based upon where we are at the time.“

Claims lower income people benefit more than rich; untrue

An analysis by Congress’s Joint Committee on Taxation shows that in 2005, Bush’s plan would reduce taxes on households making $200,000 or more by $32 billion, or 27% of the total tax cut in that year of $120 billion. Households making less than $40,000 would receive $12 billion in 2005, or 10% of the total.

Bush has said in all the debates that his plan would require people at upper-income levels to pay a greater share of federal income taxes. The analysis shows that households making $200,000 or more in 2005 would pay 27.4% of total federal income taxes under Bush’s plan, just as they do now. Households making $100,000 or more would see their share of the total income tax bill tick up to 25.2%, from 25.1% under current law. Neither calculation considers the effects of the estate tax, which would benefit people at upper-income levels the most.

$500B to people earning under $100K; $800B to those richer

Gore offers virtually nothing for taxpayers making that much money. Gore selectively targets his tax cuts to married couples and families and also offers credits to nearly 30 million of the working poor.

Bush, instead, emphasizes cutting tax rates, especially the highest rates, so that most of the cuts flow to the people who pay most of the taxes. In the Bush plan, two-thirds of that $500 billion goes to people making between $50,000 and $100,000-and less than 5% of the overall tax cut goes to people making less than $30,000. People with no income tax liability-but who still pay payroll taxes-get almost nothing under the Bush plan.

Yes, wealthy get tax relief, but 6M poor will pay no tax

BUSH: If you pay taxes, you ought to get tax relief. The vice president believes that only the right people ought to get tax relief. I don’t think that’s the role of the president to pick: “You’re right, and you’re not right.” I think if you’re going to have tax relief, everybody ought to get it. And, therefore, wealthy people are going to get it. But we’ve structured the plan so that 6 million additional American families pay no taxes. If you’re a family of four making $50,000, you get a 50% cut in your federal income taxes. And I believe the people who pay the bills ought to get some money back. It’s a difference of opinion. He wants to grow the government, and I trust you with your own money.

Q: What do you say specifically to what the vice president said tonight? He’s said it many times, that your tax cut benefits the top 1% of the wealthiest Americans.

BUSH: Of course, it does. If you pay taxes, you’re going to get a benefit. People who pay taxes will get tax relief.

Wealthy now pay 62% of all taxes; with his plan, 64%

GORE: Look, this isn’t about Gov. Bush, it’s not about me. It is about you. If everyone here in this audience [of several hundred] was in the middle of the middle class, then the tax cuts for every single one of you, all added up, would be less than the tax cut his plan would give to just one member of that top, wealthiest 1%. Now, you judge for yourselves whether or not that’s fair.

BUSH: Fifty million Americans get no tax relief under his plan.

GORE: That’s not right.

BUSH: And you may not be one of them; you’re just not one of the right people.

GORE: That 50 million figure, the journalists are the keepers of the scorecard and whether or not you’re using facts that aren’t right. And that fact is just not right.

Claim that every taxpayer gets relief isn’t true

All Americans deserve tax relief; no more “fuzzy numbers”

BUSH: He says he’s going to give you tax cuts; 50 million of you won’t receive it. He wants to make sure the right people get tax relief. Everybody who pays taxes ought to get tax relief. The wealthiest Americans will pay a higher % of taxes than they do today, and the poorest of Americans won’t pay any tax at all. It is a huge difference. It’s the difference between big, exploding federal government that wants to think on your behalf and a plan that meets priorities and liberates working people.

GORE: You haven’t heard the governor deny these numbers. He’s called them fuzzy. But the fact remains, almost 30% of his tax cut goes only to Americans that make more than $1 million.

BUSH: Let me give you one example, the Strunk family. They make $51,000. They pay about $3,800 in taxes. Under my plan, they get $1,800 of tax relief. Under Vice President Gore’s plan, they get $145 of tax relief. Now tell me, who stands on the side of the rich?

More child & charity deductions in $1.3T tax cut

Bush would like to cut taxes by $1.3 trillion over the next ten years. In particular, he would:
• Introduce a new 10% lowest income-tax bracket for a couple’s first $12,000 in taxable income.
• Double the child tax credit from $500 to $1,000.
• Replace the current structure of five tax brackets with four (10%, 15%, 25%, and 33%).
• Reduce the marriage penalty (by which married couples pay more than cohabiting singles) by allowing them to deduct 10% of up to $30,000 of the income of the lower-earning spouse.
• Allow taxpayers who do not itemize their returns to deduct up to $7,200 of charitable contributions.
• Eliminate the estate tax.
• Permanently extend the corporate research tax credit.
• Allow tax-advantaged savings accounts for education.

Cut taxes on income, children, & inheritance

More deductions for kids, education, charity, and marriage

Highlights of Governor Bush’s Tax Plan:
• Double the child credit to $1,000
• Replace the current five rate structure of 15, 28, 31, 36, and 39.6% with four, lower rates: 10, 15, 25, and 33%
• Expand the charitable deduction to non-itemizers
• Increase the annual contribution limit on Educational Savings Accounts from $500 to $5,000, and expand them beyond college, down to Kindergarten
• Eliminate the death tax
• Restore the Reagan 10% deduction for two-income married couples, greatly reducing the marriage penalty
• Eliminate the Social Security earnings test
• Support an extension of the moratorium on Internet sales taxation at least through 2004
• Oppose any taxes on access to the Internet
• Veto any increase in personal or corporate income tax rates.

Reduce share of tax burden on low- and middle-income

The Bush tax cut plan makes the tax code more progressive by providing the biggest percentage cuts to the lowest income earners. As a result, the share of the total tax burden shouldered by low- and moderate-income earners will decrease (from about 10 percent to slightly over 8 percent), while the share shouldered by those making more than $100,000 will increase (from less than 62 percent to more than 64 percent).
• A single mother with one child earning $18,500 will receive a $500 tax cut.
• A single mother with one child earning $22,000 will receive a $1,000 tax cut.
• A single mother with two children earning $32,000 will receive a $1,500 tax cut.
• Young people making just above the minimum wage will receive a $200 tax cut.
• A family of four will not pay any income taxes until $36,500, saving up to $1,750.
• As a result, six million families - one in five taxpaying families with children - will no longer pay any federal income tax.

Tax cuts, so help me God

Q. So, Governor, is this no new taxes so help me God? A: This is not only no new taxes. This is tax cuts so help me God. There is a mindset in Washington that says if we have extra money let’s create more federal government. That’s not the way I think.. Rather than create more government, I think we ought to pass money back to the working people in America.

No national sales tax or VAT.

State tax policy is closely linked to federal policy. 36 states currently use either federal income or federal tax liability as the state tax base for personal income taxes. It is critical that Congress and the administration do not enact tax reform in a vacuum, but in consultation and in partnership with the nation’s Governors.
• National Sales or Value-Added Tax The nation’s Governors oppose a national sales or transactional value-added tax. Such taxes would intrude into a tax area that has traditionally been reserved for and relied on by state and local governments. If enacted, either of these taxes would seriously threaten the ability of state and local governments to maintain their tax base.
• Current Income Tax If Congress decides to reform the current tax system, they should reduce the complexity of current income taxes; increase incentives to work, save, and invest; and increase efficiency and fairness. As part of any reform of the current income tax, the nation’s Governors would oppose any modification to the deductibility of state income taxes, property taxes, and the interest on state and local bonds.
• Transition If major tax reform is enacted, it should not be implemented for at least three years, to give states ample time to adjust their own tax systems.
• Information Needs of the StatesThe ability of states to tax various revenue sources depends to a large extent on information that only the federal government can collect. This is becoming much more important given the complexity of both the international and domestic economies in tracing where goods and income are generated. It is critical that the federal government separate tax reform per se from the information that is collected from individuals, businesses, and corporations with respect to income generated. The data collection role of the federal government must be developed in partnership with state and local governments.