This was a very interesting article. It suggest 5 options for congress to cut taxes in light of the Bush tax cuts expiring soon.
1) Fiscal responsibility : it suggest that the expiring tax cuts will show whether candidates meant what they said about the deficit. Ending the tax cuts in any way will help raise a significant amount of money to put towards our deficit. It suggested that letting all tax cuts expire will raise 260 billion dollars a yr over the next decade.
However, right now the democrats suggest renewing all tax cuts except for households over 250000 dollars a yr and the republicans suggest renewing tax cuts for everyone.
2) Close Loopholes : There are a lot of loopholes in getting tax returns. Taking out many of these, for personal income and for businesses, would create a lot of government revenue. " In all last year, they cost the Federal Government $1.05 trillion." This is striking next to the figure $915 billion which is the total revenue for all personal income tax combined.
3) JOBS,JOBS,JOBS : Many republicans claim that continuing the tax cuts will give people more money to spend. However, the tax cuts are not likely to help and after Bush originally implemented them, job losses continued for another two years. They propose businesses tax cuts and infrastructure investment.
4) A Millionaires Tax: They suggest creating a new tax bracket above the highest 35% level.
5) A Tactical Retreat: the final possibility if all these other suggestions fail - to permanently extend tax cuts for families making under 250000 and only extend for those above for two years.
Potentially it seems as though all of these could be plausible solutions although admittedly I had a little bit of an issue when I tried to graph it out for myself. The only issue is with #4 because theoretically the "millionaire tax bracket" could be the people who could invest the most into the economy and if taxes are higher then chances are their consumption will decrease.
ReplyDeleteThe Republicans have been using the deficit as an excuse for obstructionism. If they are serious about reducing it, they will have to support an expiration of at least some of the tax cuts. The wealthy are the only income group sufficiently recovered from the recession to be able to afford higher taxes without hurting consumption.
ReplyDeleteThe problem with all of these suggestions, tragically, is that they are all politically unviable (and not just from the point of view of the Republicans, Kyle). I personally like the last two options; they seem the most reasonable and sell-able. Sadly, the millionaires are the ones funding campaigns, so there will be little reform there. Many of the loopholes in place currently, while abused, actually are there for legitimate reasons. Most tragic is that fiscal responsibility is the least likely option to actually be implemented of all of these.
ReplyDeleteOf course all of the options are politically unviable from all perspectives. Raising taxes has never helped win elections. My point is that we need leaders (Democrats AND Republicans) who are brave enough to take a stand on doing what is best for the long-term interests of the country regardless of what is best for their short-term political self-interests.
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