One of the biggest ironies lost in the tax debate is that the very same Democrats who worked assiduously to block the Bush tax cuts have now embraced 98% of the cuts. In fact, they are running around the country propping up working class Americans as examples of the calamity that is set to befall the middle class if the tax cuts expire.
Amazingly, if you turn the clock back over 10 years, Democrats were fighting to block these tax cuts. They claimed that most of the tax cuts were for the rich and that the effect on the middle class was inconsequential. Tom Daschle said that the cuts would only be enough to purchase a new muffler.
As a blast from the past, take a look at what Senator Dick Durban had to say during the Senate debate over the tax cut conference report on May 26, 2001 [CR: Page S5770]
I will give some illustration of what this bill does. The Senate tax bill gave 35 percent of all of the tax cut benefits to the top 1 percent of taxpayers. What does that mean? A $44,000 tax break for people with incomes above $373,000 a year. I do not believe that was responsible. Quite honestly, if there is to be a tax cut, it should be a tax cut for all Americans, not heaped on the wealthiest in this country. But hold on. The new bill, this product of a conference report, does not make this tax cut any fairer.
Under the conference agreement, the average tax cut for these same people making over $373,000 a year has increased by 23 percent. Instead of a $44,000 tax windfall for the highest 1 percent of taxpayers in America, it is now a $54,000 tax windfall for those with incomes in excess of $373,000.
Some come to the floor and say: Wait a minute, the top 1 percent of taxpayers pay the most taxes; shouldn’t they get the most when it comes to tax cuts. Those in the top 1 percent pay about 22 percent of Federal taxes. The Senate bill gives them 35 percent of the benefits of this tax cut. This conference agreement raised that share to 38 percent. They paid 22 percent of the taxes; they receive 38 percent of the benefits. There is no fairness here.
I suggest that sending a $300 check to a taxpayer sometime this year as an indication of good will with this tax cut is cold comfort when one considers the wealthiest in this country will receive $54,000 a year in tax benefits under this proposal we are considering.
11 years of reality has evidently been so stark that even Democrats agree with 98% of the Bush tax cuts. Democrats have gone from demeaning the tax cut as a $300 token to the middle class – one that is enough to purchase “a can of Pepsi a day.” Now they realize the reality, although they refuse to apologize for blocking the cuts.
The reality is that the Bush cuts expanded refundable tax credits and knocked down the lowest brackets so that so many more people don’t pay income taxes. I’d like to see Durbin complain about his math of the top 1% receiving 35% of the benefits of the tax cuts. Well, it turns out that thanks to the Bush tax cuts on the lower and middle class, they now pay 37.4% of the income taxes. In 2001, 27% of income tax filers paid no federal income taxes; in 2010, it was 41%.
So according to Durban’s own math, it turns out that the Bush tax cuts were fair and he was wrong. And were we to raise taxes on the top bracket, they would pay far beyond the share they originally benefited from the tax cuts.
It’s time for Durbin and other Democrats to man up and give Bush the proper credit for lowering the tax burden on everyone.