Compared to Minnesota Governor Tim Pawlenty's plan for tax reform, the Bush tax cuts are a quaint example of fiscal restraint.
Jamelle BouieTim Pawlenty’s economic plan relies on a single fantastical notion, that tax cuts always produce an increase in revenue. When challenged on that with the Bush tax cuts, which depressed revenue for most of the last decade, Pawlenty has taken to attacking Bush for insufficient conservatism, blaming the president for spending too much while cutting taxes. To avoid the same trap, Pawlenty plans to do two things: first, make massive cuts in entitlements and social spending, and second, take the Bush tax cuts and pump up the volume. His plan would reduce the corporate tax rate from 35 percent to 15 percent, cut the top income tax rate from 35 percent to 25 percent, and eliminate taxes on capital gains, dividends and estates.
As this chart from the Center on Budget and Policy Priorities shows, Pawlenty’s tax plan dwarfs the Bush tax cuts in size and scope:
Under current law, according to Citizens for Tax Justice, the richest 400 taxpayers paid an effective tax rate of 17. Under Pawlenty’s plan, the richest 400 would pay an effective tax rate of 4.7 percent, a 73 percent reduction. To pay for this, Pawlenty would completely dismantle the federal government, leaving it a hollow shell of itself, and leaving millions of Americans to languish in poverty.
Naturally, conservatives love it.
Jamelle BouieTwitterJamelle Bouie is a Knobler Fellow at The Nation Institute and a Writing Fellow for The American Prospect magazine in Washington D.C. His speciality is US politics—with a focus on parties, elections and campaign finance—and his work has appeared at The Washington Independent, CNN.com, and Ta-Nehisi Coates' blog at the Atlantic, in addition to regular blogging and analysis at The Prospect. He is a recent graduate of the University of Virginia, and lives in Washington D.C, though his heart remains in Charlottesville, VA.