Why Payroll Tax Cuts Should Be Made Long Term - Essay Example

First assignment Number of words: 250 Why payroll tax cuts should be made long term Dear Editor, The tax cuts by the Obama’s administration should be extended. This is because the enacting of the payroll tax cuts during the Obama’s administration for the last two years has provided a lot of relief to the taxpayers strengthening their financial capabilities. It is therefore a fact that at the expiration of the tax measures this year would have a massive pinch on the taxpayers if not looked at carefully, this is in addition to the reality that it was not a part of any pledge. According to Tom Porcelli a chief economists at RBC Capital Markets, “I think some people could be in for a pretty rude awakening when they get that first paycheck of the year.” I agree with him given the burden that such tax cut measure expiration would have on the local American citizens. It would have been long term as it has lead to an anticipated economic growth with up to 2% within duration of 2 years. Therefore, the government should fast track the adoption of laws to avert the expiration of this tax relief and this time make it even more lasting as the testing face of the laws have proved fruitful. To do this they need the support of the major opposition, the Republicans. This is because for many households’ tax rates under the Obama’s administration has been much lower and affordable as compared to the same in Bush administration. This is despite the fact that they were introduced simply as stimulus laws. The extension of such tax cut measures will ease life for the households and extend support to the ailing economy. Second assignment How to avert tax increases if averting tax cliffs will not work The owing automatic rise in the tax rates of the American households have the impact of negatively affecting the lives of the Americans in terms of their welfare socially, politically and at most economically. The Obama’s administration is majorly left with the option of allowing the payroll tax systems established 2 years ago to elapse in its efforts to solve the fiscal cliff. This is though likely to have a negative impact on the social security funds by the U.S. wage earner by lowering their share in the said funding system by a clear 2 percent increasing the taxation of the household by $ 1,000 a year for earners of $50,000 annually. This act should though be progressive so that the impact on the wage earner is uniformly felt. The more wealthy individuals should be taxed according to their earnings as the less income earners are taxed the other way round. The government through the support of the opposition republicans has to join hands to in their efforts to fuel the government role of protecting their citizens socially by way of creating a habitable social environment largely dependent on the security measures placed. The government must also put aside their political differences in its efforts to provide a secure political climate for the thrive of the economic activities engaged in by the citizens. Despite the lapse of the payroll tax system, the household composed of the tirelessly working Americans can still work to cover the anticipated loss of 2% if the government unites with the opposition to create a favorable economic climate supporting every bit of economic activity that the American engages in. Taxation is a government initiative that can only be regulated through the formulation of the favorable laws and fiscal tools to enable the functioning of the government. The government and the opposition in such times have to come together and formulate laws, which are not exploitative to the citizens. This will involve the government considering an opportunity costs between allowing the tax rate reverting to the original 6.2% from the regulated 4.2%, which would result into a raise of the government revenue by about $125 billion in 2013, and the economic welfare of the wage earners. The economic growth that is likely to result from this is quite negligible of a mere 0.8% of the total U.S. economic output with the entire social impact being a damp on the consumer spending with vast negative impacts on the economic growth. This is because as a result the economic vices like unemployment and insecurity will emerge at quite a fast rate. The government is in control of this, as the worker would only be caught in a surprise after the impact on the same on their income hence it is the government is the sole party that can regulate on the same. Majority of the population is the lower income group who earn $1 million annually and therefore the government in its bid to enhance income distribution and redistribution, should encourage through policies and increase on earners of more than $1 million yearly. The government in this bid must also consider supporting the activities of the lower income bracket by enhancing the payroll taxes in as must as they are regulating the top earners. This is because the lower income earners form bulk of the economy and any support given to them directly translate to a positive impact on the whole of the economy. This should therefore be a motivating factor to the government and the congress to maintain the taxes at the lowest as they have in the short past and even make them long term this time. The rules and policies governing the same must be placed in time to give a grace period for review of the same. Third assignment What the new Obama’s Regime must do to the economy? The last four years have been turbulent though the administration had laid down the foundation. Therefore, the newly elected Obama’s administration has a hell of tasks to perform for the U.S. economy in the next four years all from its promises to the U.S. citizens. On top of the agenda is the averting of the forthcoming fiscal cliff, which is critical and diverse. The choice on what to do first and which to follow until the last option depends on the president’s aspirations when it comes to his choice of projects for the prosperity of the American population. Given that he is starting the second term when the world economy is quite stable as opposed to when he started the first term at the verge of the 2009 meltdown, the electorate has quite a lot of expectation. The four key areas that the administration has to focus on are to first fix the fiscal policies to make the country be away from the fiscal cliff. In connection to this, the administration has to ensure there are adequate jobs for the ever-rising US job market at adequate wages to help build the economy in terms of per capita. The third pillar is derived from the fact that the success of the Americans depends on the upward mobility of the households, this could be supported by the favorable policies that the administration ahs to put in place. In the category, the last pillar was not given much light during the campaigns yet all the above depends on it, this current issue affects the whole of the universe due to industrial development. That is the menace climate change requires adequate government policies. The policies must also state the compensation plan from the industrialized nations who spoil the environment the most. The swift fix of the fiscal policies is mandatory because is the obvious of cut spending and tax increases is done for an ailing economy, the likely impact would be throwing the economy into recession which may work negatively on the government in terms of the view of the citizens on the performance of the government. The huge deficit by the government is because of the massive borrowing, which did not start today but has been there throughout history. The deficit spending is therefore likely to go into the future if the democrats and the republicans do not come together to avert the problem and make it sustainable by making the deficit sustainable in the end. This can be done by avoiding quick use of austerity measures while nurturing the fragile economy through making laws to prevent future deficit borrowing. Furthermore, the US has acute employment issues with millions of the citizens going without employment for a period of more than a year. It must be noted that economic growth is a balance between consumption and expenditure of which growth is drastically reduced due to excessive consumption hence the government has to provide job opportunities to the unemployed to make them productive. This is because the growth of the economy is necessary but must not be surpassed by reduction in wages. For upward mobility of the population across the divide, the gap between the top and the lower has to be acknowledged and the reasons behind the same. This will propagate extensive research on the same to fuel a development on the areas like the market forces, technology and globalization to fuel improvement in terms of upward mobility of the general population. Lastly, climate change is a serious issue, specifically when it comes to technologically advantaged nations who emit most of the carbon into the atmosphere. This is because it will increase on the total costs of the projects undertaken hence effective laws have to be put in place to govern compensation based on the amount of carbon emission in the atmosphere. Work Cited "US Edition." THE WALL STREET JOURNAL. Version 14. London, 8 Nov. 2012. Web. 18 Dec. 2012. Read More