The Heritage Foundation

News Releases on Taxes

September 20, 2004

September 20, 2004 | News Releases on Taxes

Bush Tax Plan Would Strengthen Economy More Than Kerry's, Study Shows

WASHINGTON, SEPT. 20, 2004 - President Bush's tax plan consistently outperforms Sen. John Kerry's proposal-generating stronger job growth, greater economic activity and more spending money for families, according to a new report from The Heritage Foundation.

  • The Bush plan leads to significantly stronger employment growth between 2005 and 2014 than is likely under the Kerry plan-a difference of more than 400,000 jobs per year.
  • Under Bush's plan, gross domestic product in 2014 would be more than $22 billion higher than under the Kerry plan.
  • The Bush plan would leave families with hundreds of dollars more disposable income each year than the Kerry plan would.
" President Bush's plan is more successful over the long term because it relies on supply-side tax policy changes, where Kerry focuses most of his attention on demand-side policy moves," said CDA Director William Beach, director of CDA.

The analysts also found that either plan would generate greater growth than the "baseline" forecast-that is, the economic growth that could be expected if lawmakers enacted no future changes in tax and spending policies. Doing so would mean allowing the entire 2003 tax package to expire after 2008 and the entire 2001 package to expire in 2010. In fact, "most of the growth likely under Kerry's plan comes after 2011-when he generally adopts the current Bush approach of supporting permanent tax cuts," Beach notes.

Both simulations also demonstrate that lower tax rates boost the incomes of all Americans. But the difference is that Bush's plan would do so by changing the incentives to work and invest; the Kerry plan instead would make changes on the consumption side of the economy, the report says.

The CDA report also notes that its simulation examines only the candidates' tax proposals, not their spending plans. This, it says, is because campaign tax proposals tend to lend themselves to this sort of review, but spending plans rarely do.

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