Thursday, September 30, 2010
Tax Cuts-What is there effect?
This article discusses the Bush tax cuts and the effects they have and had on the economy since they have been enacted. Now President Obama is faced with a tough economic decision whether to keep to the tax cuts running at cost of running 3.7 trillion dollars over the next 10 years or end them and raise taxes on the American public next year. Both of these decisions for the short term and long term impacts on the economy if the deficit continue to increase it will effect the value of money which will also increase crowding out investment. If tax cuts where to expire and the tax rates where to rise it would rise the rate of government saving adding to the supply of government funds but with the rise in tax rates it would greatly effect consumption and decrease ones disposable income which could in the short term have a disastrous effect on the nations already troubled economy.
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Raising taxes right now will only affect the economic growth of the country. Higher taxes means less disposable income.
ReplyDeleteHowever, I agree wit the policy of increasing taxes for the rich because they won't spend it anyway and in the future, once the deficit has narrowed their taxes will narrow down automatically.
It is a topic for much discussion and anything done wrong can really affect the US economy further.
Another point I want to make is that even though taxes will increase government revenue, this revenue will go into covering the deficit and not increase saving and thus the interest will not go down and investments will not go up!