Download file to see previous pages...
The issue of tax cuts has been contentious between the democrats and the republicans since early 1960s. Earlier on, the republicans were opposing tax cuts while the democrats were pushing for them. The tables have been overturned today, the democrats are in the opposition and the republicans advocate for tax cuts. Each of the parties has viable ideas on the issue but they have never harmonized and agreed on one idea. This paper will focus on effective tax cuts; who makes better use of tax cuts.
Tax cuts are mostly introduced by the government during recessions. The government gives a relief in tax at various levels to increase the total income that individuals and businesses receive. Due tax cuts, the government reduces the amount of revenue it receives from taxes and hence the need to close the gap arises. The government thus starts selling more bonds to the individuals whom are the beneficiaries of the tax cuts and foreigners. This stimulates expenditure at all levels in the economy and the government gets back the tax cut money (Chuck para 1).
It has been interesting to watch politics and how the government handles its operations since 2008. The issue of tax has been on the discussion board for a long time. Different parties have different points of view and the government has been torn between several viable decisions in most cases. Studying the politicians and their ideologies is particularly important since their decisions while in the government directly affects the citizens. It is therefore important for every citizen who receives income to familiarize themselves with the current tax issues. The information may also come in handy when deciding which candidate to vote for (Chuck para 3).
The American government is run by the democrats and republicans. Philosophically, the democrats are liberals while the republicans are
...Download file to see next pagesRead More
This is related with the discretionary fiscal policy which amounts for the periods within recession where government could enhance the highway spending so that it could stimulate aggregate demand. Since it is not mandated by law and is not automatic, the discretionary fiscal policy does bring about measures which help in reviving the economy.
Another way tax cuts help revive the economy is through the supply side channel. A tax cut leads to greater disposable income, thus there is greater incentive for people to work . The greater incentive to work results in greater supply i.e. there is an increase in aggregate supply.
Although the tax code was originally passed during the Bush presidency, it was extended in the Obama presidency and is collectively referred to as the Bush Tax Cuts. The tax cuts were intended to be temporary measure but remained in place for significantly long, causing an outcry from politicians and taxpayers as they drew towards their expiry.
So mothers' takes a step forward and go out to support their family but this does cost them in the form of the childcare remittance which unreasonably takes large share from their earning and hence much of the effort goes in vain. So the government is force to take any steps to ease such burden from low-to-middle income families hence Government took steps to help its citizen as the problem escalated in 2000, when the Common Wealth Government initiated to provide subsidy of child care fess which was up to $144 a week for low-income families and even in this system families earning million dollars a year can also be eligible of this allowance.
As profits increase, businesses-both small and big-can expand for greater profit potential. As businesses expand, employment opportunity increases. As more people are employed, more goods and services are bought, thus further increasing profit.
A similar growth occurred under President Reagan's tax cuts which "stimulated a 17-year economic expansion, interrupted only by an eight-month downturn in 1990-91" (Commonwealth Foundation, 2005, n.p.).
Since these shareholders are not wholly responsible for the profits of the company, Bush found that the taxing of their contributions was unfair and unnecessary. With this new plan "investors holding shares of public and private corporations would be able to claim a high dividend tax credit that would roughly match the corporate income tax levied on profits prior to their distribution" (Mintz 108).
Although there are rumors suggesting that tax cuts could result to a long-term budget deficits, economists during the Bush administration strongly believe that implementing tax cuts is sufficient enough to stimulate investment and public spending
most of the revenue generated from taxes goes in public order, social engineering, the enforcement of law, defense of property, defense expenditure, public services, economic infrastructure (roads, parks etc) .
According to Elliot, an economist working with the Conservative Way Forward, this prompted the American government to institute tax cuts so as to reduce the tax burden that citizens and foreign investors had to bear as a way of encouraging investment (Elliott, Sinclair &
2 Pages(500 words)Essay
GOT A TRICKY QUESTION? RECEIVE AN ANSWER FROM STUDENTS LIKE YOU!
Let us find you another Essay on topic Effective Tax Cut: Who makes better use of tax cuts for FREE!