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President Bush has recently sent a new budget to the Senate that plans to
solidify the controversial tax cuts of 2003. When the budget is submitted,
the debate regarding this issue will likely resurface. Hopefully, the
Senate will see the benefit this tax cut has had on the American economy.
Making the tax cuts permanent is a very important issue for the American
economy.
During the middle
of 2001-2003, the unemployment rate in the U.S. was steadily on the rise.
Seeing that action had to be taken, President Bush proposed a tax cut to
stem the rise in unemployment, and hopefully get the U.S. out of an
economic recession. The notion that the tax cuts help the rich and hurt
the poor ignores the good that tax cuts have done. Before the tax cuts
were instituted, the unemployment rate was around 6.0%. After the tax cuts
were put into place, and for the first time in two years, the unemployment
rate begun to drop consistently. In fact, within the last three years, the
unemployment rate has dropped considerably to 4.7%. In 2004, there was the
most job growth in the American economy since 1999. All of this proves
that the American Economy has bounced back after the recession in 2001, a
fact I believe can be attributed to the tax cuts.
The principal
behind the tax cuts is when there is more money circulating within the
economy, the economy goes up. With this in mind, it is especially
important that the owners of companies receive significant tax cuts, since
businesses fuel the economy. By giving these businesses money, they would
in turn expand their companies, hiring more workers in the process.
Getting people jobs
is the most important step for helping an individual. When a person
receives a job they start to contribute to society, and make it so that
others will no longer need to support them. Instead of that individual
receiving money for doing nothing, they now stop being a burden on
society. This way, they help others while helping themselves. Having a job
is the most crucial step in being able to live independently, while
stimulating the economy.
There is a general
misconception that taxes lower the federal income. This is simply not
true. For example, someone who was previously unemployed and paid no taxes
will now, with their new job, be paying taxes more to the government.
During 2000-2003, the annual federal income had declined by 200 billion
dollars. The tax cuts were then put into place, and since that time the
federal revenue has gone up by 20%. This 20% increase translates into
about 440 billion dollars added to the government’s revenue. The workers
employed since Bush’s tax cuts have given 300 billion dollars of their
income to the government in taxes from their newfound jobs, and that is
only within the past three years. If the tax cuts are continued, this will
only go up. Those opposed to the tax cuts say that they will cost the
American government 1 trillion dollars. However, they fail to see that the
government will get a return of above that number from the American
people. This is from a combination of the government no longer needing to
support those that have benefited from the tax cuts, and from the taxes
gained from both the added jobs and consumer spending. The government will
have more money to spend if the tax cut policy is continued.
It is a simple
matter of economics as to whether or not the tax cuts should be continued
or not. Instead of looking at the supposed implication of these tax cuts,
we should instead look at their results to see how effective they were.
They aided the needy by giving them jobs and helped to propel America out
of a recession. Congress should look at results when deciding the fate of
the tax cuts, rather then political one-liners, since results are what
help those in need.
Sources: U.S. Department of
Labor: Bureau of Labor Statistics, The Heritage Foundation, The
Washington Post, The Cato Institute, The Wall Street Journal |
