By
Chris Buchheit on August 14, 2010
A huge political battle is brewing in Congress – whether or not to let the Bush tax cuts expire. According to the New York Times, the battle could set fiscal policy for years to come – as it’s expected to be a huge election topic.
The Democrats are prepared to let the tax cuts on the wealthy expire, but to keep the cuts on other income brackets at their current levels. That would mean that individuals and couples making less than $200,000 and $250,000 respectively wouldn’t see their taxes increase. All others above this level would.
As the political battle is set to wage, what would the implications of letting the tax cuts expire be?
Almost all Republicans and a few Democrats agree that simply letting the cuts expire now, while the economy is still weak and fragile, would only make matters worse – and I agree with them. Credit is still tight, money isn’t exchanging hands nearly as fast as it could be, and jobs are still hard to come by – and all three of these problems are related. The last thing this country needs right now is more taxes.
The top earners are, for the most part, those who own the companies that create jobs in this country. If taxes were lowered for them, the credit crunch would not be nearly as potent as it is in keeping jobs away from our economy. In short, if businesses have more money, they can hire more hands.
President Bush’s tax cuts are set to expire by the end of the year, and if Congress doesn’t act decisively now, the entire economy could suffer.
As a case in point, a blogger on the internet pointed to the yacht taxes of the mid-90s. In his words, once the tax was levied on yachts, the selling of yachts predictably dropped – which meant that dock hands and marines suffered too. There was a decreased demand for these services, and the shipbuilding business tanked as well. The tax was quickly repealed. This example shows how taxation on the wealthy can adversely affect all others within different tax brackets.
That’s my take on it, but what do you think? Gimme some comments!