This article in the Wall Street Journal talks about President Barack Obama's plan to cut the federal deficit over the next 10 years. The federal deficit is expected to be around $9 trillion even if the President's policies were to work. Obama plans to undo the Bush tax cuts for upper-income Americans and create a health-care plan that doesn't widen the deficit over the next decade.
President Obama is expected to increase the tax on the richer Americans which is in contrast to what President Bush did in his 8-year tenure. People in favor of the new policy argue that the rich would indeed have enough money to pay the taxes without hampering the economy. Opponents of the plan argue that the tax increase would choke off growth and massacre small businesses in the country. However, previous figures show that increasing the tax on the rich would in fact help the economy more than hampering its growth.
Another point of debate is the possible efforts by the richer Americans to hide or under-report their income if the taxes were to be increases. At the current rate of tax, the government is expected to raise around $7 trillion in the next decade. In order to raise the additional $9trillion, the tax rates need to be increased to an astonishing figure of 68.9% which seems highly unlikely at this point.
The bottom line to the whole debate is which method would be best for improving the economy. It could be either raising or decreasing the taxes!
President Obama is expected to increase the tax on the richer Americans which is in contrast to what President Bush did in his 8-year tenure. People in favor of the new policy argue that the rich would indeed have enough money to pay the taxes without hampering the economy. Opponents of the plan argue that the tax increase would choke off growth and massacre small businesses in the country. However, previous figures show that increasing the tax on the rich would in fact help the economy more than hampering its growth.
Another point of debate is the possible efforts by the richer Americans to hide or under-report their income if the taxes were to be increases. At the current rate of tax, the government is expected to raise around $7 trillion in the next decade. In order to raise the additional $9trillion, the tax rates need to be increased to an astonishing figure of 68.9% which seems highly unlikely at this point.
The bottom line to the whole debate is which method would be best for improving the economy. It could be either raising or decreasing the taxes!
1 comment:
If past evidence has shown that increasing progressive taxes has less detrimental consequences for growth than a general tax increase, than the choice seems obvious. The Bush administration had tax cuts for "the rich" and an increased budget deficit- it is necessary to return to the more logical policies of the past and have more progressive taxation to help minimize this deficit and move the economy out of the recession and towards long term growth with more saving.
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