Wednesday, June 8, 2011

Pawlenty's Tax Plan Triples Cost Of Bush Tax Cuts

Even though the Bush tax cuts were followed by the slowest economic growth since WWII, Republican presidential candidate Tim Pawlenty proposes a more extreme version. Pawlenty's tax plan would cost $7.8 trillion over the next decade–triple the cost of the Bush tax cuts. Pawlenty has plenty of goodies in store for the rich, of course, while putting the economy in jeopardy. Michael Linden of the Center for American Progress analyzed the effects, starting with Pawlenty's tax proposals:

– Cutting the top individual income tax rate down to 25 percent;

– Having just two income tax brackets, 10 percent and 25 percent;

– Eliminating all taxation on capital gains, dividends, and estates;

– Cutting the corporate tax rate down to 15 percent

These proposals, taken together would bestow a massive tax cut on the wealthiest people in the country. They would also reduce overall federal revenues to a such a low level that even if Pawlenty’s draconian, radical spending targets were achieved, deficits and debt would still soar out of control.

All together, Pawlenty’s tax proposal would generate an average revenue level of just 13.6 percent of GDP from 2013-2021. That translates to a tax cut of $7.8 trillion, and that’s on top of $2.5 trillion cost of extending all of the Bush tax cuts...

Pawlenty also says that he will balance the budget, and cap spending at 18 percent of GDP. Unfortunately for Pawlenty, his tax plan leaves him about $8.4 trillion short. Given that reality, he can either embrace a huge middle-class tax increase, or give up his claims to a balanced budget. If he doesn’t make up that revenue, deficits and debt will skyrocket, even if he does slash spending back to levels not seen in half a century. 

Current Minnesota governor Mark Dayton is unimpressed with Pawlenty's ideas, especially given the latter's record as former governor:

"I think it's ironic that he's talking about a fiscal plan for the entire country when he left his state a mess. He decided he was going to leave and left it to his successor. They knew they were going to kick this down the road."

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