Bush in and The tax cuts lowered federal income tax rates for everyone, decreased the marriage penalty, lowered capital gains taxes, lowered the tax rate on dividend income, increased the child tax credit, eliminated the phaseout on personal exemptions for higher-income taxpayers, eliminated the phaseout on itemized deductions , and eliminated the estate tax.
The Bush tax cuts were two changes to the tax codes that were made to provide tax relief to families in and to businesses in Bush to stimulate the economy during the recession that followed from the dotcom burst. The tax cuts were initiated to provide families with more disposable income in the hopes that the additional funds will spur spending in the economy. However, many taxpayers saved the refunds, instead of spending it.
However, following the economic recession , the tax cuts were extended to Because the tax cuts were in place for so many years, they began to feel permanent rather than temporary, and taxpayers and politicians raised a major outcry as their expiration date approached. Those who wanted to let the tax cuts expire as scheduled argued that the government needed the extra tax revenue in the face of its massive budget deficits.
Those who wanted to extend the Bush tax cuts or make them permanent argued that because taxes reduce economic growth and stifle entrepreneurship and incentives to work, effectively increasing taxes during a recession was a bad idea. The Bush tax cuts coupled with the war spending on Iraq led to a budget deficit from the reduction in tax revenues received by the government.
A tax rate is the percentage at which an individual or corporation The effective tax rate is the average rate at which an individual Obama said, "I'm not willing to let working families across this country become collateral damage for political warfare here in Washington.
And I'm not willing to let our economy slip backwards just as we're pulling ourselves out of this devastating recession. So, sympathetic as I am to those who prefer a fight over compromise, as much as the political wisdom may dictate fighting over solving problems, it would be the wrong thing to do. As for now, I believe this bipartisan plan is the right thing to do.
It is the right thing to do for business. It offers us an opportunity that we need to seize. Administration officials like Vice President Joe Biden then worked to convince wary Democratic members of Congress to accept the plan, notwithstanding a continuation of lower rates for the highest-income taxpayers. In an interview during these debates, former President Bush said, "I wish they would have called it something other than the 'Bush tax cuts'.
There'd probably be less angst amongst some to pass it. And I happen to believe lower taxes is what stimulates economic growth and what we need now in our country is economic growth. On December 15, , the Senate passed the compromise package with an 81—19 vote, with large majorities of both Democrats and Republicans supporting it. The "fiscal cliff" refers to December 31, , the date of the expected implementation of government spending reductions and expiration of a large number of tax cuts, many of which were the tax cuts enacted under George W.
Bush and extended by President Obama. In a report released in May , the Congressional Budget Office CBO In addition to the government spending reductions and tax cuts, increases in costs from the Patient Protection and Affordable Care Act were slated to take effect, as well. According to the Associated Press , the increase would be the second largest after the tax increase of , if population growth, increased pay and the size of the economy are taken into account.
According to the Center on Budget and Policy Priorities , the expiration of the Bush income tax rates i. The tax cuts made the tax system less progressive.
From through , the tax cuts increased the after-tax income of the highest-income taxpayers by a far larger percentage than they did for middle- and low-income taxpayers. The CBO concluded that. The explosive path of federal debt under the alternative fiscal scenario underscores the need for large and timely policy changes to put the federal government on a sustainable fiscal course. Policymakers will need to increase revenues substantially above historical levels as a percentage of GDP, decrease spending significantly from projected levels, or adopt some combination of those two approaches.
In fact, the current laws that underlie CBO's baseline projections provide for significant changes of those kinds in coming years; many other approaches to constraining future deficits are possible as well. CBO's term "alternative scenario" refers to extending the tax cuts and preventing scheduled automatic spending cuts, while "baseline scenario" refers to allowing the tax cuts to expire and the spending cuts to take place, as provided for by laws in effect in June The expiration of the tax rate cuts was opposed by Republicans including those on the House Ways and Means Committee , which attempted to produce a bill providing for a one-year extension that would ensure that federal tax rates for all income levels, capital gains, dividends and estate taxes would remain the same.
The bill would have also retained tax credits including the child tax credit but would propose ending the current payroll-tax cut.
On January 1, , the Bush Tax Cuts expired. However, on January 2, , President Obama signed the American Taxpayer Relief Act of , which reinstated many of the tax cuts, effective retroactively to January 1. From Wikipedia, the free encyclopedia.
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Please update this article to reflect recent events or newly available information. Conservatism portal Economics portal Government portal. Retrieved November 21, Archived from the original on March 8, Retrieved April 5, Retrieved February 12, Center on Budget and Policy Priorities. Retrieved July 1, Retrieved July 19, Retrieved March 31, Archived from the original PDF on May 16, Retrieved March 30, The Conscience of a Liberal.
Fiscal Years to " PDF. Retrieved December 10, Retrieved December 1, The New York Times. Retrieved January 14, Retrieved December 7, Retrieved November 10, Archived from the original on November 2, Retrieved November 11, September 9, — via Christian Science Monitor. Retrieved January 20, Retrieved February 11, Retrieved December 18, Archived from the original PDF on August 23, Retrieved June 25,