Even Fox News is skeptical of Jeb Bush’s plan to cut taxes for the rich.
Bush’s recently-unveiled tax plan would lower the effective tax rate of those earning $10 million or more from 26 percent to 21 percent, and would lower the corporate tax rate from 35 percent to 20 percent. Even the conservative-leaning Tax Foundation admits that the tax cuts would reduce overall revenue by at least $3.6 trillion in a decade, and that the richest top 1 percent of earners (filers making at least $406,000 per year) would see their incomes increase by 11.6 percent. By contrast, middle-class earners would only see their incomes increase by less than 3 percent. Bush defends the tax cuts by claiming they would spur a sustained 4 percent growth rate each quarter.
But in an interview today with Fox’s Chris Wallace, Bush looked visibly uncomfortable when Wallace pointed out that Bush’s tax plan would, according to his last six years of tax returns, give the former Florida governor a $3 million tax cut. He also pointed out that his father, George H. W. Bush, called Ronald Reagan’s theory that lower tax rates would spur income growth “voodoo economics.”
“Does Jeb Bush need a $3 million tax cut?” Wallace asked.
Jeb skated Wallace’s questioning, claiming that the wealthiest Americans pay the most taxes, and that as a result, those taxpayers would receive a larger benefit. While that statement is technically accurate, it ignores the larger context of how much America’s tax system favors corporations and the wealthy, and how the bulk of America’s tax burden has shifted to the middle class, particularly since the George W. Bush administration.
Jeb’s plan to cut the corporate income tax rate from 35 percent to 20 percent only exacerbates the problem of declining corporate tax revenue. As the chart above shows, revenue from corporate income taxes as a percentage of overall GDP has dramatically decreased, from 6 percent when Eisenhower was president, to a little over 1 percent during the Reagan administration, to just under 0.9 percent by the end of George W. Bush’s second term.
At the same time, payroll taxes — which are paid by both employers and employees — have made up a larger share of federal tax revenue as corporations’ responsibility has gone down. As the below graph by Pew Research illustrates, the increase in percentage of revenue from payroll taxes, and the decrease in revenue from corporate income taxes from the Eisenhower to the Reagan administration almost mirror each other.
Jeb Bush is correct saying that the top 1 percent pay more in income taxes than other earners. But he leaves out the fact that 95 percent of all income growth in the last six years went to the top 1 percent. And that’s a trend that’s continued for decades — since 1966, average income growth for the bottom 90 percent of Americans only grew by $59. The top 10 percent saw their incomes grow by over $116,000 during that same time period. For households in the top 1 percent, average incomes grew by $628,817. And incomes for the top 0.01 percent grew by an astonishing $18.36 million over the same time period.
Investigative journalist David Cay Johnston illustrated this trend of skewed income growth in a bar graph. The $59 figure relating to incomes of the bottom 90 percent is represented by one inch. The bar representing the top 10 percent’s share of income growth would be 163 feet high. The 1 percent’s income gains would be 884 feet high (almost as tall as the Chrysler Building). And the income growth of the top 1 percent of the top 1 percent would be represented by a 4.9 mile-high bar on the same chart — almost as high as Mount Everest.
While the richest have accumulated massive gains over the last several decades, average Americans haven’t had a raise in almost as long. In inflation-adjusted dollars, Americans are making less today than they did 40 years ago. As Pew Research reported, the $4.03 average hourly wage recorded in 1973 has the same purchasing power as $22.41 today. And according to the Bureau of Labor Statistics, the average hourly wage for non-management private sector workers is $20.67.
This chart compiled by the Willamette Week, using data from the IRS, shows that Americans saw consistent income growth from 1950 to 1980 — the average household saw their incomes grow by over $13,000 during that time period. But from 1980 to 2008, the average household saw their incomes grow by less than $300.
If these charts prove one thing, it’s that the 1 percent have been sucking up almost all of the rewards from the work done by the 100 percent for more than a generation. Jeb’s tax plan is little more than a continuance of the current trend of upward redistribution of wealth. The fact that even Fox News is calling foul on these policies is perhaps the best sign that Americans are wising up to the scam and demanding an end to it.
Watch the full interview below:
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