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104 IRET Policy Bulletin 1 (2011)

handle is hein.taxfoundation/iretpbul0063 and id is 1 raw text is: December 5, 2011 No. 104 THE ECONOMIC CONSEQUENCES OF GEORGE W. BUSH'S TAX POLICIES Introduction This paper estimates Chart I Changes in GDP Due To Tax Changes the long term effects of During George W. Bush Administration the tax policies of the George W. Bush 10% 8.6% Administration on the 8% U.S. economy and the 6.6% federal budget. The 6% estimates project the ultimate effects if the 4% policies remain in place 2.6 long enough for all 2% ---- economic adjustments to 0% be made. Chart 1 FULL 2001 EXCEPT 2003 BONUS FULL 2001+2003 END ESTATE TAX ESTATE EXPENSING AND EXCEPT ESTATE indicates that the full LOWER RATES ON effect of the income tax CAP GAINS AND DIVIDENDS provisions of the 2001 and Source: Calculations by author 2003 tax reductions is to (Total does not add to components due to rounding and interactions.) increase GDP by nearly 8.6 percent over time. Taken separately, the reductions in the tax rates on capital gains and qualified dividends and the bonus expensing provisions enacted in 2003 raise GDP by 6.6 percentage points, and the income tax provisions enacted in 2001 raise GDP by 2.6 percentage points. (The impact of the parts sum to more than the total impact because of interactions. In particular, the 2001 rate cuts and the 2003 bill both reduced tax rates on dividends.) An additional 1.4 percentage points were estimated for the elimination of the estate tax in 2010, and the reduction in the gift tax. However, the estate tax has been reinstated for 2011 and beyond, albeit at a reduced tax rate and with a larger exempt amount, eliminating about 40 percent of the benefit of the repeal provision. Institute for IRET is a non-profit, tax exempt 501(c)3 economic policy research and educational Research organization devoted to informing the public about policies that will promote on the economic growth and efficient operation of the market economy. Economics of 1710 Rhode Island Avenue, N.W., 11th Floor • Washington, D.C. 20036 Taxation (202) 463-1400 • Fax (202) 463-6199 • Internet www.iret.org I POLICY BULLETIN i

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