Essay: Maintaining Tax Cuts

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Essay: Maintaining Tax Cuts

Sample Essay

On the other hand, the government should not increase taxes for the rich since majority of the rich arise from running small businesses and increasing their taxes could mean that they will be required to retrench their workers. Fast growing businesses taxes should also not be increased too. This is because expiry of the tax cuts means increased taxes upon the paycheck of the household, this will be translated to decreased disposable income thereby meaning that the household will have little resources to save and invest. Contrary, one needs to know that if the tax cuts are extended during an economic recovery, then the economic recovery will be slowed. Making them remain the same will mean then a continued economic recovery at the current rate at ceteris Paribas in the short run. However, in the long run, this will have negative economic impact of slowing recovery due to increased federal debts.  This means that maintaining the present bush tax cuts could have adverse effects for the US economy.

The democratic argument of maintaining the tax cuts for a certain bracket is an argument worth considering especially during the elections year. Their argument is that the rich do not need money and the tax cuts benefits them by increasing their saving which they do not use to aid in the economic recovery. The middle class need extra income which they have to spend since they have more affected by the economic melt down hence maintain a tax cut for a certain bracket will increase the rate of economic recovery. Though both the republicans and the democrats are calling for extension of the tax cuts for a certain income bracket, this is likely to happen due to political reasons not for economic reasons. The economic recovery is a debate that will take long to be resolved; however, the economic conditions prevailing in the US do not call for extension of the tax cuts after expiry.

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