George Bush promised Americans that he would create an ownership society. It would be a society in which more Americans owned assets and would have a greater stake in the society. This article looks at the policy changes that Bush implemented and their impact on the ownership society that he promised.
The major changes made by the Bush Administration were in tax policy:
* Taxes on dividend income were reduced by as much as 57%
* The tax on capital gains was reduced from 20% to 15%
* The estate tax was effectively eliminated for couples with estates below $10 million
* Stocks passed on to the heirs at their current value; no tax collected on the increase in value.
Bush argued that these policies would encourage more Americans to own stocks in his Ownership Society:
* In 2000 one in eight Americans owned stock. By 2012 only one in fifteen Americans owned stock.
* Only one income group reported an increase in capital gains on stock between 2000 and 2012. It was
the 2.1 million group of taxpayers that reported negative income from other sources.
* In 2000 50% of capital gain income went to the top one tenth of 1%. In 2012 62% of capital gain
income went to that small group.
* In 2000 18% of dividend income went to the top one tenth of 1%. By 2012, that group's share of
dividend income rose to 38%. Their income from dividends increased from an average of $246K
Bush's "Ownership Society" clearly benefited a small sliver of society; it failed to spread the ownership of stock to a broader segment of society. His policies had the opposite effect. They concentrated the ownership of stock held by those with incomes above $2,000,000. Moreover, they were able to pass the appreciation of those assets on to heirs with no tax on the appreciation.
Bush also encouraged Congress to allow individuals to obtain a mortgage on a home with no down payment. We saw what happened when those mortgages were packaged into securities and sold to investors. Instead of increasing home ownership, the percent of Americans owning homes in 2013 fell to its lowest level since 1995.
The Mid-Term elections have returned political power to the political party that promised to create an "Ownership Society" but implemented policies which had the opposite effect. The public has little respect for either political party, but they typically throw out the incumbent party when it they are unhappy with government. The Obama Administration was dealt a bad hand when it inherited the Great Recession, but it failed to gain the confidence of the public. The electorate turned against the party in power and put the advocates for Bush's "Ownership Society" in control of the government. It will advocate the same policies that concentrated income and asset ownership under Bush and which were not substantially reversed by the Obama Administration.