Letting Tax Cuts Expire Will Not Balance the Budget

(This chart originally came out before the decision was made in Dec of 2010 to extend the tax cuts, but it is important now to look at this subject again since they will again expire at the end of 2012!!!)

Everyone wants to know more about the budget and here is some key information with a chart from the Heritage Foundation and a video from the Cato Institute about the Laffer Curve. In a year and half (end of 2012) the Bush Tax Cuts will expire. However, is that wise? Not if you understand the Laffer Curve.

Some argue for allowing the 2001 and 2003 tax cuts to expire, including subjecting the middle class to the alternative minimum tax in order to balance the budget. Under this scenario, unaffordable deficit spending would still continue, and economic growth and job creation would suffer.

PERCENTAGE OF GDP

In Depth

• Policy Papers for Researchers

  • BACKGROUNDER ON JUNE 21, 2010The Three Biggest Myths About Tax Cuts and the Budget Deficit
  • CENTER FOR DATA ANALYSIS REPORT ON SEPTEMBER 20, 2010Obama Tax Hikes: The Economic and Fiscal Effects

• Technical Notes

  The charts in this book are based primarily on data available as of March 2011 from the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO). The charts using OMB data display the historical growth of the federal government to 2010 while the charts using CBO data display both historical and projected growth from as early as 1940 to 2084. Projections based on OMB data are taken from the White House Fiscal Year 2012 budget. The charts provide data on an annual basis except… Read More

• Authors

  Emily GoffResearch Assistant
  Thomas A. Roe Institute for Economic Policy StudiesKathryn NixPolicy Analyst
  Center for Health Policy StudiesJohn FlemingSenior Data Graphics Editor