This week, I’ve asked readers to chime in on the Bush tax cuts. This guest post is courtesy of Renee Taylor, CPA (for more on the topic, see the original post):
In the movie “Pay It Forward,” recipients of good deeds are supposed to perform a good deed for someone else rather than repay the kindness to the original giver. Our federal government is masterful at this concept, but unfortunately in the worst possible way. Rather than a good deed, it’s paying forward to future generations an unsustainable level of national debt.
It’s for this reason that I say: Let the Bush tax cuts expire, across the board, all of them.
I consider myself a fiscal conservative, but not in the semi-histrionic political sense currently in vogue. I’m in favor of balancing budgets versus kicking the deficit down the road for the next generation(s) to deal with. (And I say this from a childless person’s perspective; I don’t even personally have a “next generation.” I just think that putting off taxes til tomorrow when they could be paid today is shameful and unfair.)
Would you run your own business in such a way that it’s chronically forced to borrow just to pay the bills? What about your personal finances? Granted, many Americans do this very thing. It’s become the regrettable norm. But that doesn’t mean it’s sensible policy, neither for your household nor for the federal government.
I believe that using tax policy to stimulate the economy (and theoretically increase tax revenues through strengthened private-sector vigor) is flawed. Past tax cuts in and of themselves have not generated record revenues for the federal till. Instead, they’ve simply reduced tax revenues — and this during a time of unprecedented government spending. It just doesn’t make any sense. We can’t have low taxes and high spending and expect to remain — or even become — solvent or attractive to our creditors.
Extending the Bush tax cuts for the top two percent alone would require us to borrow billions more over the next decade. And by “us,” I mean you and me — not just the top two percent.
This issue isn’t about politics. It’s about responsibility. It’s about taking the difficult step in the right direction of returning our nation’s fiscal house to order. It’s even about (gasp!) sacrifice so that future generations of Americans aren’t made responsible for this generation’s profligacy.
Legislators, please let the Bush tax cuts expire. Stop using the tax code for short-term political goals and dubious economic incentives. Tinkering at the margins won’t get us out of this muck. It will only “pay forward” even more painful tinkering for your children and grandchildren.
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This week, I’ve asked readers to chime in on the Bush tax cuts. This guest post is courtesy of Michael Rozbruch, IRS Problem Solver and Tax Relief Blogger (for more on the topic, see the original post):
Tax cuts can actually be a good thing for the economy; they just have to be able to provide enough of a boost to lift the economy out of its rut. It just so happens that the tax cuts put in place during the Bush administration weren’t enough because of the weak economy bolstered by the mortgage melt down.
If the current administration allows the Bush tax cuts to expire, as they are hoping for, this would not only be a huge tax increase in disguise for the American people, but also will put more nails in the coffin of the small business man in this country.
In order to make the current economic situation easier to understand, it is important to review the Bush tax cuts as well as some U.S. economic history. The main Bush tax cut act originated in 2001 – it was called the Economic Growth and Tax Relief Reconciliation Act of ‘01. What really emphasized and enforced that was the Jobs and Growth Tax Relief Act of ’03. Taxes paid by millionaire households more than doubled upon the enactment of this act from $136 billion in 2003 to $274 billion in 2006.
A central U.S. policy for the last 80 years, called Keynesian economics, is the use of a federal budget deficit to counterattack an economic slowdown. It’s a way to stimulate the economy when things are bad.
With the expiration of the tax cuts put in place during the Bush administration, tax burdens would shift to the wealthy. Couples earning more than $250,000 would see the top tax rate rise to 39.6% by 2011. There also would be new limits on tax deductions, including for charitable donations.
Allowing the Bush tax cuts to expire would fall in line with President Obama’s pledge to cut taxes for the middle class while allowing tax cuts for the rich to expire. It’s a known fact that about 47% of Americans, at the lower end of the scale, don’t pay any income taxes.
Additionally, a majority of the Bush tax cuts, were enacted to help the small business owner, and as everyone knows it is the small business person that it responsible for 70%-80% of job growth in this country.
While the administration hopes to use additional revenue to fund deficit-reduction and other federal projects, the impact on businesses is not going to be good for this country; there are a lot of small business owners that will be put out of business if the administration raises taxes on people who are making $250K.
If the tax cuts are left to expire……you think things are bad now?….just wait!!!!
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This week, I’ve asked readers to chime in on the Bush tax cuts. This guest post is courtesy of Michael J. Craig, EA (for more on the topic, see the original post):
The Bush Tax Cuts are about to expire and does anyone want to do anything about it? The American political system is designed not to work. Well-organized special interests can routinely grind it to a halt. The recent explosion of hyper partisanship on the part of both the Democrats and the Republicans is adding to the problem. With the mid term elections coming up, there is a trifecta of inertia that is about to descend on the Republic. Many of the provisions of the Bush Tax Cuts are now woven into the fabric of American life. The full blown return of the marriage penalty, the reduction of the child tax credit and the further limiting of personal deductions will shock American tax payers. Sadly, taxpayers will have no recourse. The votes are not there to extend the tax cuts in there entirety and a piece-meal extension only serves partisan interests of one kind or the other. So get ready to pay more and get less. The political good will necessary to solve this problem does not exist and won’t for the foreseeable future. So much for change you can believe in.
Tagged as:
Bush Tax Cuts,
guest posts
This week, I’ve asked readers to chime in on the Bush tax cuts. This guest post is courtesy of Stuart C. Wardlaw, CPA (for more on the topic, see the original post):
On January 20, 2009, the Bush Administration handed over not only the keys to the White House; but also a box full of live hand grenades.
Two of those grenades have their pins pulled and are set to explode on January 1, 2011, in the form of a resurrection of the Federal Estate Tax and the expiring income 2001 Bush Tax Cuts.
As a practical matter, we cannot afford to make the repeal of the Federal Estate Tax permanent, no matter how much screaming about the “death tax” is heard. Nor can we perpetuate wealthy dynasties – one of the original reasons the estate tax came to be. We can set a higher exemption, say $3.5 million, lower the top tax rate to 45% of the taxable estate, and remove carryover basis provisions, which would essentially return the estate tax to its 2009 existence. A compromise solution at best, but superior to the extreme alternatives facing us all.
Expiration of the 2001 Bush Tax Cuts poses a thornier problem, particularly in this Great Recession. While it is advisable to allow the top tax rates to increase; the lower rates, capital gains and dividends taxes should be held firm until the economy improves.
As a condition upon Congress, PAYGO (pay as you go – new spending would be tied to other reductions) should be enforced except in the case of national emergencies. If PAYGO is not enforced – allowing spending to increase, then an automatic tax increase should take place across the board. Such a measure would cause the voting public to pay a lot more attention to what their elected officials are doing, and may very well help in getting our Federal budget under control.
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PAYGO
