Effects of Bush’s tax cuts

The tax cuts that Bush passed in his first year in office were indeed the largest in at least two decades, as this panel states, and the Congressional Budget Office estimates that the cuts added $1.6 trillion to the federal deficit due to decreased revenue.  The cuts were set to expire in 2010; Obama extended them for two years at that time.  In 2012, Congress made the cuts permanent for families earning less than $450,000/year.

Although all income levels received some tax relief with the cuts, the benefits were concentrated in the wealthiest segment of Americans and contributed to higher rates of income inequality.  The Congressional Research Service found a 74% increase in after-tax income for the top 1% between 1996 and 2006, and a 96% increase in after-tax income for the top .01% during the same period.  The rich are indeed getting richer in the US, in part because of legislation like the Bush tax cuts that had a regressive effect on the tax code.

The tax cuts are one big reason the federal budget shifted from surpluses during the 1990s to deficits in the following decade.

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