"...also echoes a favorite GOP line that the budget surplus constitutes an "overcharge" that must be returned to the taxpayers, in the same way that a restaurant would be obliged to give you a refund if it miscalculated your bill..."

"...for example, Karl Rove explained that the tax cut...was designed to cope with the current recession. "All the signs were there in the second, if not the second, the third quarter of 2000," Mr. Rove said..."

Paul Krugman (New York Times):
"...Of course, you might wonder why Mr. Bush himself didn't have second thoughts -- why he thought that the exact same tax plan he proposed in the feverish bull-market days of late 1999 was still appropriate in the post-bubble economy of 2001. And his officials surely knew that tax receipts were dropping like a stone even as they were reassuring a docile Congress that everything was just fine. But one thing we have learned about this administration is that it never responds to altered circumstances by changing its plans; all it does is change the sales pitch. So the tax cut was relabeled as a recession-fighting measure, a task for which it is peculiarly ill-suited..."

(This is covered again in CC202B)

"...A corollary of Bush's false assertion that his tax cut would help everyone, but especially the poor, is that the Democrats' proposals might help the poor but wouldn't help every one else. "To me, the best tax policy is to treat everybody fairly and to say if you pay taxes, you get relief," the president likes to declare..."

also said, "...Democrats were intent on "targeting people in and targeting people out" of tax relief..."

Also see: Jonathan Chait (TNR)

(1 for mis- representing compassion on Democratic proposals and 1 for lying about  compassion on his own plan)

Stating (about Democrats), "..."There is an amazing new kind of economic theory working its way through Washington, and it said that tax relief causes recessions," the president declared. "The worst thing you can do is raise taxes during a recession."..."

Bush

"..."[t]here's going to be people who say, we can't have the tax cut go through anymore. That's a tax raise." He added: "Not over my dead body will they raise your taxes."..."

Lindsey for Bush

"...Mr. Lindsey fell back on his usual argument: that the tax cut is needed to support the economy...he was defending those future tax cuts. "A repeal of the scheduled tax cut would hit the economy at precisely the wrong time," he declared..."

Joel Friedman and Robert Greenstein (CBPP):
"...All of the budget proposals currently under discussion to stimulate the sagging economy call for cutting taxes, not raising them. The Administration's plan, the House-passed bill, and the Senate Finance Committee proposal all include tax cuts. In his January 4 speech, Senate Majority Leader Daschle reiterated his support for temporary tax cuts to help revive the economy and proposed a new tax cut aimed at lowering the cost of labor for businesses. There are no proposals on the table to raise taxes to eliminate near-term deficits; a tax increase of this kind runs counter to a broad consensus of economic advice concerning the appropriate fiscal policy to undertake when the economy is in recession.
To be sure, some in Washington have called for deferring or cancelling some portions of last year's tax-cut legislation that have not yet gone into effect. The most widely discussed proposal is to defer or cancel implementation of scheduled future reductions in some of the upper-bracket tax rates. Those rate reductions are not scheduled to take effect until 2004 and 2006, long after the recession is expected to be over. As a result, deferring or cancelling those rate reductions would not affect tax collections during the current downturn.
Nor would such proposals raise tax rates above their current levels. The top tax rate was reduced from 39.6 percent to 38.6 percent in 2002. Under the tax cut enacted in June, this rate would be reduced further in future years, falling to 35 percent in 2006. Cancelling these future reductions — which would affect only the top one percent of tax filers — would maintain the top rate at its current level of 38.6 percent. Such an action, which would save about $90 billion through 2011, would not increase tax rates above today's levels.
Finally, even if one labels the cancellation of a future rate reduction a "tax increase," it cannot be equated with an immediate increase in taxes. The impact on the economy of cancelling a future rate reduction is very different from the impact of instituting a tax increase today..."

Also see: Joel Friedman, Robert Greenstein and Andrew Lee (CBPP), Paul Krugman (New York Times)

"...Some are arguing that maybe we ought to roll back the taxes. I guess they're saying that. They're now against tax relief, and if you're against tax relief, it must mean you're for maybe rolling it back..."

"...I call upon the leadership on both sides of the aisle not to fall prey to a false set of economic assumptions that say if you raise taxes it'll help the economy. It will hurt the economy..."

Compassiongate: 
If raising taxes "will hurt the economy", then Bill Clinton was never President, nor was Reagan who was responsible for one of the biggest tax increases ever in 1982! As Joe Conason points out in Big Lies (page 77): "In October 1994 the Wall Street Journal explained: 'Contrary to Republican claims, the 1993 package is not the 'largest tax increase in history'. The 1982 deficit reduction package of President Reagan and Sen. Robert Dole in a GOP-controlled Senate was a bigger tax bill, both in 1993-adjusted dollars and as a percentage of the overall economy.'..."

 In response to Sen. Kennedy's (D-MA) proposal

"...first three points in the press release assert that two-thirds of families with children would be hurt by reinstating the marriage penalty, reducing the child credit, and repealing the scheduled rate reduction to 25 percent...The Treasury materials discussed the impact of rolling back most of the major tax reduction enacted last year..."

O'Neill for Bush

"...80 percent of the higher income taxes that he proposed would be paid by business owners who file individual returns..."

Lindsey for Bush

"..."[m]illions of small businesses would see their taxes increased under the Kennedy plan. More than 7 million returns are likely to be affected..."

"...Bush's favorite example of who would benefit from his tax cut--repeated countless times over the last 18 months--is a single waitress with two kids who earns around $20,000 per year. "Under my plan," he likes to boast, the waitress "will pay no income tax at all."..."

Lindsey for Bush

"...If you don't pay taxes it's very hard to get a tax cut..."

Jonathan Chait (The New Republic):
"...That's true. Because the waitress almost certainly doesn't pay any income taxes to begin with. (The only exception would be if she had no child care expenses at all--unlikely for a working single mother of two--in which case she would owe no more than $120.) It is typical of the duplicity Bush has brought to the subject that the people whom he claims would benefit most from his tax cut would not, in many cases, benefit at all...
When pressed on this, the White House has responded with a shrug. "" But this is another deception--while low-income workers may not owe income taxes, they do owe payroll taxes. Nearly 80 percent of the workforce, in fact, owes more in payroll taxes than in income taxes. If Bush truly wanted to help the working poor get ahead, he would propose cutting payroll taxes. But these are among the few federal taxes Bush has shown no interest in cutting..."

Isaac Shapiro, Allen Dupree and James Sly (CBPP):
"...About 12 million low- and moderate-income families with children — nearly one in every three U.S. families — would not receive any assistance from the tax provisions that President Bush is likely to send to Congress on February 8. An estimated 24 million children under age 18 — one in every three children — live in these families...
Even the Bush proposal to double the child tax credit — the feature of his tax plan that one might expect to provide the most assistance to children in low- and moderate-income families — would be of little or no help to many of them. This proposal would provide the largest tax reductions to families with incomes in the $100,000 to $200,000 range and confer a much larger share of its benefits on upper-income families than on low- and middle-income families...
The level at which families now begin to pay federal income taxes is approximately 130 percent to 160 percent of the poverty line, depending on family type and family size. For example, in 2001, a two-parent family of four does not begin to owe income tax — and thus does not begin to benefit from the Bush plan — until its income reaches $25,870, some 44 percent above the poverty line of $17,950..."

stated that "I agree with my critics, however, that those on the bottom end should get the most help."

later "...affirmed that "by far the vast majority of my tax cuts go to the bottom end of the spectrum."

Robert Greenstein (CBPP):
"...The CTJ analysis of the tax proposal that President Bush presented in the campaign finds the following results (these results reflect the tax cuts when fully in effect):

• The bottom 40 percent of tax filers would receive four percent of the tax cuts. The average tax cut for this group would be $115.

• The bottom 60 percent of filers would receive 13 percent of the tax cuts, receiving an average of $227 each. The bottom 80 percent of taxpayers would receive 29 percent of the tax cuts.

• The 20 percent of filers exactly in the middle of the income spectrum would receive eight percent of the tax cuts and get an average tax reduction of $453.

• By contrast, the richest one-percent of Americans would receive 43 percent of the total tax cuts, receiving an average tax cut of $46,000 each. The top five percent of filers would garner a little more than half of the tax cuts...

"...When President Bush unveiled his tax cut in 1999, Citizens for Tax Justice calculated that more than 40 percent of it would go to the richest 1 percent of Americans...Bush's minions... emphasize that the tax cut would increase the proportion of income taxes paid by the rich..."

Also

"...According to Bush's calculations, just 22.3 percent of the benefits from Bush's tax cut go to the top 1 percent of taxpayers..."

Also see: Daily Howler

"...During the presidential campaign, the Bush campaign staff used a competing set of figures that purported to show that the share of the tax cut going to high-income individuals would not be any larger than the share of taxes these individuals pay..."

Robert Greenstein (CBPP):
"...One common justification for tax cuts heavily geared toward those at the top of the income spectrum is that high-income individuals pay a disproportionate share of taxes and hence should receive a corresponding share of the tax cuts. When applied to the Bush tax cut, however, this rationale falls short.
First, the Bush tax plan showers tax cuts on high-income individuals far out of proportion to the taxes they pay. The previously noted Treasury Department study shows that the wealthiest one percent of Americans pay 20 percent of all federal taxes. As this Center report explains, however, the top one percent would receive at least 36 percent of the tax cuts under the Bush plan...
The Treasury analysis also indicates that the top five percent of taxpayers pays 36.5 percent of federal taxes. This group would receive at least 49 percent of the tax-cut benefits under the Bush plan.
During the presidential campaign, the Bush campaign staff used a competing set of figures that purported to show that the share of the tax cut going to high-income individuals would not be any larger than the share of taxes these individuals pay. The figures that the campaign issued to make this point, however, obfuscated rather than illuminated the issue.
Those figures showed the share of federal income taxes that different income groups paid, omitting payroll, estate, and other taxes. This made the share of taxes said to be paid by those at the top of the income spectrum into a larger percentage. The campaign then compared these figures to the percentage of the tax cut that each income group would receive when the proposal to repeal the estate tax was omitted, even though repeal of the estate tax represents nearly one quarter of the total Bush tax cut by 2010, according to Joint Committee on Taxation estimates. This made the share of the tax cut that would to go high-income individuals look smaller than it actually is..."

"...asked what his administration plans to do in the face of high gasoline prices. "Let me say it again, see if I can be more clear," he replies. "To the Congress, who is interested in helping consumers pay high gas prices: `Pass the tax relief as quickly as possible.' We've set aside $100 billion to help consumers with high energy prices. That's the quickest way to help consumers..."

"...The average relief for a family of four with two children will be $1,600..."

"...the presidential campaign and early into the new Presidency, President Bush and his advisors have cited the need to reduce the high marginal tax rates that many low-income working families face as one of their tax plan's principle goals. They have observed that a significant fraction of each additional dollar these families earn is lost as a result of increased income and payroll taxes and the phasing out of the EITC..."

Robert Greenstein and Isaac Shapiro (CBPP):
"...Despite substantial focus by the White House on the need to reduce marginal tax rates among low-wage workers, the proposal does not reduce marginal rates at all on those working poor families that face the highest such rates of any families in the nation — working families with children that have incomes between about $13,000 and $20,000. The proposal also departs from a bipartisan Congressional consensus of the past two years by failing to include any marriage penalty relief for low-income working families, even though as a group such families face some of the largest such penalties of any families..."

"...Administration has used the example of a waitress who is a single-mother with two children and earns $25,000 a year..."

Bush

"...In his Saturday radio address on February 3, the President pointed to a waitress with two children who earns $25,000 a year. He portrayed the hypothetical waitress as being a partner in the tax cut with a highly-paid attorney making $250,000 a year who is the waitress' customer at a diner..."

Isaac Shapiro, Allen Dupree and James Sly (CBPP):
"...Consider two types of families earning $25,000 a year in 2001, an income level the Administration has used in some of its examples:

• A two-parent family of four with income of $25,000 would pay $3,825 in payroll taxes (again, counting both the employee and employer share) and lesser amounts in gasoline and other excise taxes. The family pays various state taxes as well. The family's Earned Income Tax Credit of $1,500 would offset well under half of its payroll taxes. Even if just payroll taxes and the EITC are considered, the family's net federal tax bill would be $2,325. Nonetheless, this family would receive no tax cut under the Bush plan. 

• The Administration has used the example of a waitress who is a single-mother with two children and earns $25,000 a year. If this waitress pays at least $170 a month in child care costs so she can work and support her family — an amount that represents a rather modest expenditure for child care — she, too, would receive no tax cut under the Bush plan despite having a significant net tax burden. In her case as well, her payroll taxes would exceed her EITC by $2,325..."

Robert Greenstein and Isaac Shapiro (CBPP):
"...In his Saturday radio address on February 3, the President pointed to a waitress with two children who earns $25,000 a year. He portrayed the hypothetical waitress as being a partner in the tax cut with a highly-paid attorney making $250,000 a year who is the waitress' customer at a diner. This portrayal is questionable.

• If the waitress is married and her family's income is $25,000, she, too, would receive no tax cut under the Bush plan. Yet her family pays a substantial amount of federal taxes, including $3,825 in payroll taxes (including both the employee and employer share; most economists concur that the employer's share of the payroll tax is passed along to workers in the form of lower wages) and lesser amounts in gasoline and other excise taxes. The family's Earned Income Tax Credit of $1,500 would offset well under half of those taxes.⁽²⁾

• Similarly, if the waitress is a single mother who pays at least $170 a month in child care costs so she can work and support her family — an amount that represents a rather modest expenditure for child care — she would receive no tax cut under the Bush plan despite having a significant net tax burden. If her child care costs are $100 a month, she would receive a small tax cut — less than $200 a year.⁽³⁾

• By contrast, the attorney with a $250,000 income with whom the waitress is said to share in benefitting from the tax cut would receive a tax reduction of approximately $3,100 per year, assuming the current law Alternative Minimum Tax. If, however, the AMT were eliminated, her tax cut would equal an estimated $8,400.⁽⁴⁾..."

"...the Administration is touting its proposals to create a new 10 percent bracket and to double the child credit as proposals designed in substantial part to benefit lower-income working families and help them enter the middle class..."

• Some 82 percent of the benefits from the child credit proposal would accrue to the 40 percent of families with children with the highest incomes.⁽⁵⁾ Only three percent of the benefits from this proposal would accrue to the bottom 40 percent of such families.

• The top 20 percent of families would receive 46 percent of the tax-cut benefits from this proposal, a larger share than any fifth of the population would receive..."

CBPP:
"...The new analysis, "More Than Half of Black and Hispanic Families Would Not Benefit From Bush Tax Cut," finds that 53 percent of black and Hispanic families with children would receive no tax reduction if the Bush plan were enacted. About three in four of these families include someone who is working.
The six million black and Hispanic families that would receive no benefit from the proposal include 6.1 million black children and 6.5 million Hispanic children — or 55 percent of all black children and 56 percent of Hispanic children.
The outcome reflects a Bush Administration decision not to provide relief to low- and moderate-income working families that do not earn enough to owe federal income tax but pay substantial amounts of payroll and other taxes. Millions of black and Hispanic families fall into this category. They are among the 74 percent of American families that pay more in payroll taxes than income taxes..."

"...Q. Mr. Daniels, the Senate minority leader also says that 43 percent of the tax cut goes to the upper 1 percent. If that's the wrong number, what's the right number? What proportion of the 1.6 trillion goes to the top 1 percent?
In response, Treasury Secretary Paul O'Neill harshly questioned whether reporters had examined the assumptions behind that estimate saying:
"So they're playing games with the numbers. What I'm trying to flush out is for somebody to write down the assumptions underneath this mantra that [CBPP Executive Director] Bob Greenstein created for people and trying to make the point that all those people who are asking questions about it haven't examined the assumptions. And so it doesn't seem to me legitimate to even try to respond to a question that's based in a fiction of combining not just income taxes, but payroll taxes and cobbling up a bunch of other pieces of stuff to make a populist point that has no basis in fact, because the fact is, what the president has proposed for tax changes moves the incidence of taxes proportionally to the higher-income group, not to the lower-income group."..."

Jonathan Cohn (The New Republic):
"..."Why would anyone who believes in accuracy buy that number?" asked Daniels. O'Neill concurred, calling the figure "a nonsense set of statistics," and accusing the Center on Budget and Policy Priorities, which originally provided the figure to the Democrats, of "playing games with the numbers." (The numbers were actually calculated by Citizens for Tax Justice.) 
Two days later, the White House released this chart that purported to back up the claim. At first blush, it does seem to undermine the Democrats' charge. According to Bush's calculations, just 22.3 percent of the benefits from Bush's tax cut go to the top 1 percent of taxpayers.
But there are two big problems here. First, note the title: "Income Tax Burden by Income for Calendar Year 2005." The timing is not accidental. Bush's tax cut phases in, and the cuts for 2006 are likely to benefit the wealthy even more disproportionately than those in the previous years. By excluding tax cuts after 2005, the Bush Administration makes the tax cut seem more progressive than it really will be. Second, check out the last footnote. The one about how these estimates "exclude the Estate Tax and R&E Credit." The estate tax, you may recall, is also part of Bush's tax cut plan. Not coincidentally, the estate tax is also skewed to the wealthy: It kicks in at $675,000, and is already scheduled to rise to $1 million in 2006, which is why 98 percent of Americans pay no estate tax at all. Again, leaving it out makes the Bush package look like a much better deal for low- and middle-income taxpayers..."

Also see CBPP.

Said "...According to the Treasury Department, nationwide there are more than 17.4 million small business owners and entrepreneurs who stand to benefit from dropping the top rate from 39.6 to 33 percent."..."

Isaac Shapiro and Robert Greenstein:
"...In fact, small business owners would be far more likely to receive no tax reduction whatsoever from the Administration's tax package than to benefit from a reduction in the top rate. Moreover, small business owners would be much more likely to benefit from an increase in the Earned Income Tax Credit — a tax credit for low- and moderate-income workers and self-employed individuals — than from a reduction in the top rate. The President's plan includes no improvement in the EITC.

* For every small business owner who would benefit from reducing the top income tax rate of 39.6 percent, there would be 15 small business owners who would not benefit from the Administration's tax package.⁽³⁾ 

"...issued a press release entitled "Small Businesses Gain Big Benefit From the President's Tax Relief Proposal: 77% of the tax relief associated with cutting the top rate would go to small business owners and entrepreneurs."⁽¹⁾ The press release also claims that "business owners make up 63% (about .8 million) of the 1.3 million tax returns that will benefit from the new 33% rate."..."

• First, the figures in the Treasury release do not simply reflect the effects of lowering the 39.6 percent tax rate. These figures also include the effects of lowering the 36 percent rate.

• Second, the 800,000 figure that the press release says is the number of small business owners who would gain from lowering the top rate includes large numbers of individuals who are not small business owners. The figures in the Treasury release includes many individuals who, as a Wall Street Journal article recently reported, are not active small business owners but rather are affluent investors who "receive income from partnerships or Subchapter S corporations — entities that are often used for passive investment vehicles."⁽³⁾ The numbers of small business owners cited in the press release also include lawyers, doctors, and others who operate partnerships. (The Treasury press release counts as a small business owner or entrepreneur "any taxpayer that reports income from a sole proprietorship, farm proprietorship, partnership, S-corporation, or rental activities.")

• Third, even if one uses the press release's creative (and misleading) definition of a small business owner, it remains true that only a tiny fraction of such individuals— three percent of them — pay either the 36 percent or 39.6 percent rate. Treasury data indicate that 26.2 million taxpayers fall into the so-called small business owner and entrepreneur category, as the press release defines it. The 800,000 taxpayers said to have small business income and to be in either the 36 percent or 39.6 percent bracket constitute just three percent of these 26.2 million filers. The numbers of taxpayers with these forms of business income who are subject to the 15 percent rate — or who do not earn enough to owe any federal income tax and thus would receive no tax reduction from the Administration's plan — are many times larger than the number who are in either of the top tax brackets. 

• Finally, the 800,000 figure includes taxpayers whose small business income is negative. These are taxpayers who have some business losses but secure so much income from other, non-small business sources that they are in the 36 percent or 39.6 percent bracket. Such individuals generally are not small business owners; they are much more likely to be high-income individuals who have some business investments but whose high incomes come from other sources. These are not the types of individuals the public has in mind when it hears the Administration argue that small business owners would gain greatly from dropping the top rate. (Other Treasury data show that one-fourth of the 800,000 "small business returns" that the Treasury press release cites as paying the 36 percent or 39.6 percent rate are returns filed by individuals who incur losses from small business income sources and who are in the top brackets because of high incomes from other sources.)

"..."The latest set of estimates reinforces how much room there is in the federal budget to cut taxes while securing other priorities," crowed Bush spokesman Ari Fleischer to The New York Times. "We can pay down the debt and cut taxes."..."

"...responded by saying that the cost of the tax cut is only one percent of GDP (rather than 1.6 percent)..."

• Administration officials have often portrayed the tax cut as modest and fiscally responsible but the Social Security shortfall as massive and a risk to the nation's future fiscal health. In its response to the Center's analysis, the Administration itself indicates that the revenue loss from the tax cut is as large as the Social Security shortfall. The Administration claims both costs are about 1.0 percent of GDP.

...How did the Administration come up with the lower figure of 1.0 percent of GDP for the cost of the tax cut when phased in fully? The answer is that it didn't. The Administration's 1.0 percent of GDP figure turns out not to be an estimate of the full cost of the tax cut, when fully phased in and with all provisions extended, but rather the cost of the tax cut, as enacted, in 2010. That figure reflects only a little more than half of the full cost of the tax cut. The Administration's figure provides a deceptively low estimate of the full cost of the tax cut, with all provisions extended, for three reasons.

• The Administration's estimate assumes that the provisions of the tax cut artificially slated to expire in 2004, 2005, and 2006 actually die — including the provision that provides relief through 2004 from the mushrooming Alternative Minimum Tax. The Administration's estimate thus assumes that 35.5 million taxpayers will be subject to the AMT in 2010, as compared with 1.4 million today. No credible observer believes Congress will fail to act on this issue and will simply allow the AMT-relief provision of the tax cut to expire — and AMT relief to die — in 2004.

• The Administration's estimate also does not include the cost of estate tax repeal. Under the new tax law, the estate tax will not be repealed until 2010. As is well known by tax analysts, the cost of a change in the estate tax does not show up until a year or two after the change takes effect. This is because there is normally a lag of a year or so between the time an individual dies and the time that individual's estate is settled and tax is paid on it. Thus, the estimate for the cost in 2010 of the estate tax provisions of the new tax law largely reflects the cost of the estate tax provisions in effect in 2009, before estate tax repeal has occurred.

• Of lesser importance, the cost estimate for 2010 reflects only a modest fraction of the cost of raising the child tax credit from $800 per child in 2009 to $1,000 per child in 2010. Most of the cost of this increase in the child tax credit will not show up until 2011, because some of the child tax credit that many families receive is provided in tax refunds the families receive the following year, after they file their taxes.

In short, the Administration's estimate that the cost of the full tax cut is 1.0 percent of GDP relies upon gimmicks embedded in the tax bill to make that cost appear lower than it actually is. The Center's estimate, which reflects the Joint Tax Committee's estimate of the cost of the tax cut if all provisions of the tax cut are extended, is the legitimate estimate of the tax cut's long-term cost if it is made permanent. The Administration's attempt to defend its tax cut by claiming that the Center overstated the tax cut's costs and underestimated the size of the Social Security shortfall does not withstand scrutiny. Unfortunately, it is the Administration that has manipulated the numbers..."

referred to the $300/$600 checks sent out by the IRS in 2001 as rebate checks

"...Last year, some in this hall thought my tax relief plan was too small, some thought it was too big. But when those checks arrived in the mail, most Americans thought tax relief was just about right..."

"...The National Taxpayers Union (NTU) recently released a report arguing that President Bush's proposed tax cut is far smaller than the 1981 Reagan tax cut and other historical tax cuts.⁽¹⁾ Some Administration officials and Members of Congress have echoed these claims and suggested this shows the proposed tax cut is of a responsible size..."

"...When specifically asked if the tax cut had any role in the deficit, White House Spokesman Ari Fleischer replied that, in 2001, the surplus had dropped by $154 billion, while the tax cut was only $40 billion, so "something else was going on. That something else, we now know, is a recession."..."

"...submitted written testimony that claimed "this year's 10-year baseline surplus forecast is just as big as that of 2 years ago ... If we had taken a one-year timeout from 10-year guesswork, no one would say that anything was missing."..."

"...White House's Scott Stanzel told the Washington Times that "[a]lmost every leading economist believes the tax cut was the best way to stimulate growth in the slow economy that the president inherited."..."