November 8, 2012; Source: The Hill
Now that election coverage has been replaced by the drum beat of the impending “fiscal cliff,” we figure we ought to keep you abreast of some of the latest information in play, though it will undoubtedly be spun in a variety of ways in days to come. A report from the nonpartisan Congressional Budget Office (CBO) released Thursday calls into dispute claims about the devastation that would supposedly be caused by eliminating tax cuts only for the wealthy on grounds that they are the job creators. According to the CBO, the elimination of the tax cuts for only the wealthy would have a lesser effect on growth than has been suggested.
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The CBO finds that while extending all Bush-era tax cuts past the end of the year would add or save 1.8 million jobs next year, eliminating tax cuts only for households making more than $250,000, as the White House has proposed, would save nearly as many at 1.6 million. This loss of 200,000 job growth as a result of letting tax cuts expire only for the wealthy is significantly less than has been estimated by many Republicans, who have been quoting a 700,000 figure drawn from an Ernst and Young report.
According to the report, as paraphrased by The Hill, “extending all the Bush-era rates and patching the Alternative Minimum Tax would help the economy expand by an additional 1.4 percent by the beginning of next year.” Patching the AMT but allowing only the top tax rates to rise would mean growth of 1.3 percent to the GDP, an “effect nearly as large,” the CBO reports, as continuing all of the Bush-era tax cuts. –Ruth McCambridge