Tax Cuts And Its Effects On The Economy

However, these long and short term economic improvements are only what is predicted to happen and there negatives to the reduction in income tax. A factor that the government must take into account is the budget deficit, can the government afford to simply cut income tax that is a large source of revenue for the budget. A worsened budget deficit could have devastating impacts upon the economy, for example less people able to have the benefits they require, (this would also reduce demand in the economy as those on benefits generally spend the money they have as they do not have spare to save, this may damage the economy even further) or a reduction in money towards health care. Also, a reduction in income tax does not necessarily mean

Heated debates over tax cut have always been one of the central economic themes on the American political table. Since taxes relate directly to the quality of lives, it is by no means surprising to find people showing significant concern about policies regarding cutting or raising the amount they have to pay. The idea that lowering tax rate makes room for growth has remained generally popular among the majority, taking a possible decrease in individuals’ tax burden and increase in productivity into account. There is, however, extensive research conducted on the topic that produced controversial results. Despite its appeal to instant benefits for one’s saving account and investment, reducing tax rate has yet to show a definite positive effect

Tax decreases can stimulate economic growth because if people are paying less in taxes, they have more money to spend. It has been proven over the years that tax decreases generate economic growth and federal revenue will always rise. From a personal standpoint I always spend more during tax season because I usually get a good return; since I am a single parent and full-time student, therefore, I qualify for various tax breaks. These obviously affect my household because I am more disposable income. Tax decreases can help a business if their taxes are decreased the organization will payout less and have more income.

However, raising taxes on the rich and corporations is not as helpful to our economy as most people think. Although raising taxes on the top percent of people and companies appears to create more income for the government, the result will make it harder for middle class and lower class citizens to grow. Some argue that by combining several key changes, including the simplification of the tax code to avoid loopholes and the decrease of taxes on the rich and corporations, there will be an improvement in the national economy. Although this may seem a bit counterintuitive, it makes more sense when looked at closely. By lower taxes and remove all loopholes, smaller businesses are given further opportunities to grow instead of facing financial roadblocks and government

Introduced in July 2012, H.R. 8, the Job Protection and Recession Prevention Act of 2012, sponsored by Representative Dave Camp of Michigan, was approved by the House of Representatives in August 2012 and forwarded to the Senate for consideration. Opponents of H.R. 8 maintain that the plan does not provide tax cuts for all American taxpayers while supporters on both sides of the aisle argue that these changes to the Internal Revenue Code are needed to sustain the nation's economic recovery and prevent another recession. To determine the facts in the debate over H.R. 8, the Job Protection and Recession Prevention Act of 2012, this paper provides a review of relevant governmental and media sources, followed by a summary of the research and important findings in the conclusion.

In fact, much of the recent reduction in the deficit is due to the decline in unemployment” (p. 1). With record high deficits within the last years the idea of the government spending to spur the economy that ultimately would help reduce the unemployment level seems near impossible without further affecting the deficit rather than helping reduce it.

"They discounted a lot of positive growth effects of tax reform package," Huffman said of the recent analysis. "That's one government analysis, granted what some folks would call 'mainstream.' History proves that tax reform — tax cuts specifically — they grow the federal revenue. Why? Businesses make more money and people have larger paychecks and they are putting more into the economy."

Furthermore, there is little to no evidence that the Supposed “Shot of adrenaline” created many jobs in even the businesses that were making use of the policy in an honest way. In fact, according to Jordan Weissmann, a writer for Slate, “a group of economists took stock of the Kansas misadventure, using administrative tax data to figure out whether the cuts had done any good at all. In short, the researchers concluded, they had not”(Weissmann). This is alarming as if the bill did not make progress in decreasing unemployment, then the lost revenue for the state of Kansas must have caused issues in other aspects. Illustrating this point, Jordan Weismann alleges that because the State cut taxes on LLCs, it was required to “cut spending on public schools, colleges, Medicaid, and more”(Weissmann).

Today, tax cuts would only benefit the wealthy and wouldn’t really benefit the lower class. “The administration and it’s congressional alleys are proposing to sharply reduce taxation of the business

A simple way to improve the effectiveness of the tax cuts would be to lower the rate more for the middle class and to increase the corporate tax rate by a small amount. The new federal tax plan lowers tax rates overall, however, it is most beneficial to the highest tax brackets and corporations. Instead, the government should focus on lowering taxes for the middle class who will invest in the economy. The new tax plan is based on the theory of trickle-down economics which assumes people will spend their extra money therefore investing in the economy. The middle class is the most likely to spend any extra money, which grows the economy. Focusing tax cuts on the middle class would make the tax plan more effective as they will spend the extra money, “The most significant tax cuts should go to the middle class who are more likely to spend

The encouragement of economic disparity because of these tax cuts is bad for America. The US should be aiming for more social and economic equality for everybody. Tax cuts can slow down the economy by putting more money into the wealthy peoples’ hands and giving less to the people who need it.

History tells us that tax cuts have had a simulative effect in the past. However, it is less certain how effective they will be at current debt levels. Remembering that our current debt to GDP ratio is approximately 105%, history has shown that once debt to GDP rises to 100% growth slows significantly. Additionally, since the end of the great recession in 2009, it has become evident that more government debt ($8.431 trillion) on top of several trillion in monetary stimulus has done little to spur economic growth.

The main focus of the government is to ensure that there is continual job creation. Whether it takes place in the form of replacing existing jobs or inventing a new job field as a whole. Among conservatives, there is a division in beliefs pertaining to job creation, whether on the impact of raising corporate taxes or lowering taxes, has the biggest influence in net jobs. A positive net creation of jobs is seeing more jobs created than lost. Does raising the corporate taxes positively or negatively impact the net creation of jobs?

The United States is in a recession; it has been facing some of the worse economic times since the Great Depression in the 1930’s. One option to fix the economy is to change the corporate tax rate. To lower it or to raise it, that is the question economists have been speculating. America's high corporate tax rate and worldwide system of taxation discourages U.S. companies from sending their foreign-source revenue home, which makes U.S. companies defenseless to foreign acquisition from the international opponents (Camp). Corporations and United States citizens have been fighting for a tax reform, which would hopefully help the American economy; either by lowering the corporate tax, or by raising the tax.

| Critics of spending hikes argue that tax cuts can expand both aggregate demand and aggregate supply and that hasty increases in government spending may lead to wasteful public projects.Tax cuts increase aggregate demand by increasing household’s disposable income, as