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Optional - Essay Example

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The paper follows this objective through a review of literature and a quantitative assessment of the issue from both positive and negative fronts…
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Download file to see previous pages... It is, therefore, necessary that the government implements a tax-cuts with caution and one of the ways of achieving this is letting the tax cut on the rich expire and extent AMT at a permanent way.
In lieu of turning around the living standards of individuals, family and society through promoting economic activity, different national administrations around the world have brought together economists and lawyers to draft government policies whose principal pillar is tax cuts. The most notable of all is that tax cut polices are the ones proposed and enacted by The President George W. Bush’s administration in years 2001-2003. The basic tenet of this ideology is the macro-economist approach of supply-siders that, according to the Laffer’s curve, a reduction in the tax rate especially for the middle class increase their spending, which in turn increases demand that forces supply to increase by the law of demand and supply. Eventually, this leads to an increase in economic activity. Increased economic activity means that the labor market absorbs many people and at a better pay, people pay low prices for commodities, business have more capital to invest, and government can broaden its tax base by closing tax breaks and other tax leaks. However, there is no empirical backing to this claim, by the respective governments, even after adopting tax cuts on temporary terms. This is explained by the fact that reducing the tax rate actually increases government debt in the long-run, which may cause budgetary problems in the future. The best way of dealing with this is to reduce tax rates and simultaneously reduce government spending in response to reduced government revenue. However, in an effort to ensure equality, welfare and improved living conditions/standards for all, some essential services are not an obligation or mandate of players such as the corporate world, but the responsibility of the government. In this view, ...Download file to see next pagesRead More
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