The Bush era tax cuts are going to expire at the end of the year. Currently, Congress is working with the President to decide if the tax cuts should be extended for families making less than $250,000, for no one or for everybody.
President Obama and many Democrats believe that the tax cuts should only be extended for families making less than $250,000 a year. If this happens those earning more than $250,000 will have their taxes raised. This is will not help the economy. If the rich pay higher taxes they are not going to invest in businesses or buy luxury items; when this happens there will be a downward spiral that occurs. If the wealthy don’t purchase luxury items, like a yacht, what is going to happen to the yacht makers? They will go out of business because nobody can afford their product. They will join those who are unemployed. The only upside to this plan is that our national deficit is going to decrease, but only by a little. I believe that continuing the Bush era tax cuts only for those families making less than 250,000 is not the best solution.
Another solution that several Democrats think would be good is not extending tax cuts for anybody. Every single person’s taxes would be raised. This is not going to help stimulate the economy. The Bush era tax cuts are going to expire at the end of the year, and unless Congress takes action everybody’s taxes are going to be raised. I believe this is one of the worst things that could happen. With taxes higher for everybody there will be less money for people to spend. Small businesses are going to have a tough time staying open if there are no tax cut extensions. The advantage of this solution is that there would be approximately 3.7 trillion more collected in taxes that could be used to pay off the national deficit. I believe that letting the tax cuts expire is the worst action Congress could take.
The last solution is extending the tax cuts for everybody. Everyone’s taxes would stay the same if the tax cuts were extended. This would help the economy because those making $250,000 or less would not have a greater tax burden, and the wealthy would have more money to invest in the economy. I believe this is the best solution for the present. A different solution might present itself once the economy has rebounded, but at this point in time extending the tax cuts for everyone is the best solution.
If President Obama decides to cut taxes for people making less than $250,000 thousand a year, and raise taxes for everyone over that, I don’t believe that the raised taxes of the wealthy will be so great that they cannot afford to buy a yacht. I’m sure they might make some little cutbacks on their luxuries, but if they are rich enough to buy a yacht then they will would. The wealthy might actually invest more in businesses just to make up for the raised taxes they have to pay. They way they see it is, the only way to make more money is to invest it.
ReplyDeleteI agree that raising taxes or not extending the tax cuts will have a toll on the economy. Raising taxes for the low and middle classes would make them cut back on their spending. This means that they would cut back on products that are used every day, like food, clothing, and entertainment products. Instead of a few yacht companies maybe going out of business, there would be hundreds of smaller companies going out of business. The thousands of people employed by those companies would out of work.
I also agree that the taxes should be extended for everybody. No one would have to make any cut backs on anything. The people making over $250,000 would be able to buy more luxuries. The people making under $250,000 would be able to afford smaller luxuries like vacations, new cars, food and entertainment. With the extension of the tax cuts, unemployment will also be extended. The people on unemployment don’t save the money they get, they spend it! It’s barely enough to live on, so all that money will go right back into the economy. I agree, extending the tax cuts will be the best solution for everyone.