Houston Democrats

However, the claims continue. The Republicans are claiming the recent increase in Federal revenue intake is in fact a result of Bush’s tax cuts. However, as usual, the Republicans fail to look in any detail into the increasing revenue’s components. The Center on Budget and Policy Priorities has performed the analysis and here are their conclusions:

A large business tax cut enacted in 2002 — the accelerated depreciation tax cut — expired at the end of 2004. This is producing a significant increase in business tax payments in 2005 — an increase estimated at $51 billion by the Joint Committee on Taxation when the provision was enacted. Revenues are rising in this case because a tax cut is no longer in effect. The expiration of the accelerated depreciation tax cut causes tax revenue from businesses to jump significantly from 2004 to 2005, and then jump again from 2005 to 2006. But the unusual increase in revenues cannot be repeated thereafter because the provision can expire only once. The future growth rate of business tax revenues will revert to normal, all other things being equal.

Tax returns for 2004, which are filed in fiscal year 2005, appear to have included a substantial increase in capital gains tax payments, reflecting the increase in the stock market in 2004. The stock market now appears to have stopped rising; it has been flat in recent months. Capital gains revenues cannot be expected to continue increasing at the rate they did between 2004 and 2005.

An additional one-time boost in 2005 revenues is occurring because last fall’s corporate tax legislation allows businesses with foreign profits being held abroad to bring the profits back to the United States in 2005 only and pay taxes at a modest 5.25 percent rate, rather than at the normal corporate tax rate of 35 percent. This will increase revenues by several billion dollars (or more) in 2005, as corporations rush to take advantage of this windfall, but according to the Joint Tax Committee’s estimates, it will result in modest revenue losses in 2006 and thereafter.

According to the Congressional Budget Office, 2004’s total treasury receipts were 1.880.1 trillion. In 2000, total receipts were 2.025.4 trillion. So, when taxes were slightly higher there was more government revenue. Gee, imagine that.

I realize the Republicans will continue to promulgate this tax cuts pay for themselves because it is an easy sell. They are telling people what they want to hear, despite the inherent illogic and lack of factual data to support their claims. Of course, lack of factual data has never stopped the Republicans before.