The Bush Tax Cuts should be extended for all Americans
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Secondly, the tax cuts had the interesting effect of increasing government revenue, including on the national level. According to usgovernmentrevenue.com, the United States federal government collected $1.8 trillion in taxes in 2003, before the full impact of the tax cuts on the economy, until revenue peaked at $2.6 trillion in 2007 before the recession struck the United States.
Next, eliminating the tax cuts for the highest income earners would not solve our debt crisis. As reported by wsj.com, eliminating the cuts for those earning more than $1 million a year would only add about $40-$50 billion dollars in revenue, about 3% of the annual US deficit. More often than not, it would also hurt the economy, as was implied by President Obama himself when he said "You don't raise taxes in a recession." Doing so merely takes the money out of the private sector, where it can be used productively, and moves it to the government.
Finally, tax rates are already too high. The top tax bracket is 35% according to taxes.com. This means that 35 cents is taken for every dollar someone earns, and is given to an irresponsible government that has failed to demonstrate fiscal discipline. Raising taxes merely punishes the achievers in the United States and gives to an undeserving government.
Fact's will always be overshadowed with politics. Did the Bush Tax Cut's help the economy during it's recession? Yes they did. Do tax cuts help the economy; yes. The question will become, can an administration easily pass tax reform with the name George W Bush always hanging over their head? The answer is simply no.
With all the Pro's of a lower income tax, one must ask themselves one question. Is an income tax necessary? Congressman John Linder say's no. Congressman Dr. Ron Paul say's no. Former Governor of New Mexico Gary Johnson Says no.
Instead of arguing on what income taxes to have and not to have, the argument should be shifted to the necessity of an income tax. The public lost faith in George W Bush. Sitting around discussing whether or not to let the tax cuts expire or not is the wrong approach. All one does in that discussion is shift the focal point in the current status quo. This needs to change. If Bush Era politics continue and the economy doesn't improve rapidly enough, people will lose all faith in tax cuts helping everyone. It would be more advantageous for politicians to distance themselves from Mr. Bush and Mr. Obama and propose an option that is clear, to the point and show's how revenues will increase and help cut spending ( removal of the IRS via a fair tax)
We can debate income tax cut's increasing revenue and helping the economy ( of which we are in agreement) or we can discuss lowering income tax versus ending it. If not I apologize for entering this debate, I had a misunderstanding as to what you were trying to debate.
Firstly, we don't need to "always be passing a tax cut with George Bush's name hanging over it." There's a simple solution to this: just extend the tax cuts indefinitely. That way, they never have to be voted on again, and establishes them even more firmly as the permanent current tax rate.
However, with regard to an income tax, I would say that it's more trouble than it's worth to eliminate the income tax. The Founding Father's prohibited income taxes for a reason, but they could not possible have anticipated our modern society. At that time, we needed only enough money to maintain the military and navy, as well as a few of the national infrastructure projects that were put in place. This small amount of money was raised by implementation of tariffs of foreign goods, which served the double purpose of allowing young new businesses in America to thrive. However, as time went on, the government needed more revenue for various projects, and the tariff was subsequently raised. Unfortunately, it eventually got so high that other countries began to enact retaliatory tariffs, which helped further the damage of the Great Depression.
Now, we spend billions of dollars not only to keep our military up to date, but to continue military research to ensure that we have the most modern military available. We also spend money on the safety net and infrastructure throughout the country. The primary way that the government raises revenue is through the income tax. In order to abolish it and continue spending, we would need to find a replacement form of taxation. The first way might be to return to tariff policies, but this is a bad economic move. It artificially raises the price of foreign goods, and thus eliminates much of the competition in the Unites States. Without these global competitors, companies would no longer need to ensure a high quality on their goods, and nor would they have to price their goods competitively. This is called Protectionism.
The other way that we could replace this revenue would be through the enactment of the FairTax, which would implement a national sales or consumption tax as a replacement for the income tax. However, this is not without it's flaws. The fact is is that everyone in the United States has to buy something at some point. Every time someone buys clothing, groceries, toiletries, gas or any other product, they would have the to add the federal sales tax on top of the actual cost of the good. This is also not including the local and state sales tax. Where I live, we already have a 8.5% sales tax, making the total tax on a product a whopping 31.5% on any product subject to the tax. This would make the price of a modest new car (say, $20,000) increase to $26,300. This is something that many families in difficult financial situations could not afford, and they would thus have to find an alternative: either keep their current car, or buy used. According to a breakdown by thesimpledollar.com, the average American family spends about $41,214 per year on products or services that could be subject to the FairTax. This translates to an average of $12,982.42 per year, an increase of around $600, based on the average household income of $49,445 (wsj.com) and a tax rate of 25%. Many families could not afford this increase at a time when the economy is still struggling, and would encourage the purchase of used products as opposed to new products. This would hamper attempts by US companies to attempt to re establish dominance over global competitors.
In conclusion, the FairTax is unproven, and will hurt our economy further. It increases taxes on the average family and might not even cover the revenue losses caused by eliminating the income tax. It's better that we instead work on reforming our current system of taxation, which has been shown to work remarkably well, in order to keep our government running.
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