THE BUSH RECORD - FACT SHEET: President Bush Helped Americans Through Tax Relief (2024)

President Bush Helped Americans Through Tax Relief

President Bush Trusted Americans With Their Hard-Earned Money, Providing $1.7 Trillion In Relief Through 2008

President Bush demonstrated that letting people keep more of their own money leads to economic growth. In 2001, America was experiencing the unprecedented triple shock of a recession following the dot-com bust, economic disruption due to the terrorist attacks of September 11, and corporate accounting scandals. Fortunately, the country was able to overcome these challenges, in part because President Bush's tax relief put more money in families' pockets and encouraged businesses to grow and invest. Following the President's 2003 tax relief, the United States had 52 months of uninterrupted job growth, the longest run on record.

President Bush Signed The Largest Tax Relief In A Generation

President Bush's tax cuts provided $1.7 trillion in relief through 2008. President Bush worked with Congress to reduce the tax burden on American families and small businesses to spur savings, investment, and job creation.

In 2001, President Bush proposed and signed the Economic Growth and Tax Relief Reconciliation Act. This legislation:

• Reduced tax rates for every American who pays income taxes, including creating a new 10 percent tax bracket
• Doubled the child tax credit to $1,000 by 2010
• Reduced the marriage penalty beginning in 2005
• Put the death tax on the road to extinction
• Increased education tax benefits
• Increased limits on IRA and 401(k) contributions and changed limits on defined benefit pension plans –which were made permanent in the Pension Protection Act of 2006

In 2003, President Bush proposed and signed the Jobs and Growth Tax Relief Reconciliation Act. This legislation:

• Reduced the top tax rate on dividends and capital gains to 15 percent
• Accelerated income tax rate reductions
• Accelerated the expansion of the 10 percent bracket
• Accelerated the increase of the child credit to $1,000
• Accelerated the reduction in the marriage penalty
• Quadrupled small business expensing from $25,000 to $100,000
• Increased bonus depreciation for businesses to 50 percent through 2004

President Bush's Tax Relief Allowed Americans To Keep Trillions Of Dollars Of Their Own Money

Results of the President's tax relief were swift. The economy returned to growth in the fourth quarter of 2001 and continued to grow for 24 consecutive quarters. The economy grew at a rapid pace of 7.5 percent above inflation during the third quarter of 2003 – the highest since 1984. The President's tax relief reduced the marginal effective tax rate on new investment, which encourages additional investment and, in the long-term, higher wages for workers.

• In 2007, a family of four earning $40,000 saved an average of $2,053 thanks to the President's tax relief.

The President's tax relief was followed by increases in tax revenue. From 2005 to 2007, tax revenues grew faster than the economy. The ratio of receipts to GDP rose to 18.8 percent in 2007, above the 40-year average. Between 2004 and 2006, capital gains realizations grew by approximately 60 percent. Growth in corporate income tax receipts was especially strong in the President's second term, nearly doubling between 2004 and 2007 and contributing a full percentage point to the increase in the total federal receipts-to-GDP share.

The President's tax relief has shifted a larger share of the individual income taxes paid to higher-income taxpayers. With nearly all of the tax relief provisions fully in effect, the President's tax relief reduced the share of taxes paid by the bottom 50 percent of taxpayers from 3.9 percent in 2000 to 3.1 percent in 2005, the latest year of available data, while increasing the share paid by the top 10 percent from 46.0 to 46.4 percent.

President Bush Led The Response To The Financial Crisis Of 2008

This unprecedented economic growth was ended by the turbulence in the housing and credit markets, to which the President responded with bold action. President Bushaddressed the weakness in the economy early in 2008 by leading the bipartisan passage of an economic growth package that boosted consumer spending and encouraged businesses to expand, returning more than $96 billion to Americans. When the financial crisis intensified, President Bush led the passage and implementation of a rescue plan that helped address the root of the financial crisis, protected the deposits of individuals and small businesses, and helped enable credit to remain available to individuals and families. Moreover, he convened a summit with the leaders of the G-20 nations to discuss efforts to strengthen economic growth, deal with the financial crisis, reaffirm a commitment to free market principles, and lay the foundation for reform to help ensure that a similar crisis does not happen again.

• The Administration warned of the risk that government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac posed to America's financial security beginning in 2001. President Bush's first budget warned that "financial trouble of a large GSE could cause strong repercussions in financial markets." In 2003, the Administration began calling for a new GSE regulator. Despite resistance from Congress, President Bush continued to call for GSE reform until Congress finally acted in 2008 to provide the additional oversight the President requested five years earlier. Unfortunately, the reform came too late to prevent systemic consequences.

# # #