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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