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Should the Bush tax cuts for upper-income Americans be allowed to expire?

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By: Joseph Martinez, Jason Morales Villarreal, Jonas Krause, Megan O'Farrell

What are the Bush tax cuts?

• Tax cuts were passed by the former President Bush back in 2001
• Idea was for the population to reduce their taxes and have more money to spend as well as increasing employment
• This mainly affected the population who made over $250,000 a year
• Average middle class income decreased over the years leading to this recession

Opinions in Favor of Extending Tax Cuts

• Lead the public to increase their spending and help the economy rise
• Have more money at the end of the year since you will be taxed less than usual
• Business owners are in favor of extending the tax cuts because they are saving thousands in taxes
• Historically the economy was doing better before the Bush tax cuts (1990’s)

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Pro Side Continued

• Give tax breaks to people who would spend it (middle class) → deficit reduction
• Wealthy people ( >$1,000,000) won’t spend the money and stimulate the economy
• Middle class tax break is $2,000 compared to wealthy class tax break of $100,000+
• Essentially implementing the Keynesian view for the economy (stimulate the economy now)

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Opinions in Favor of Expiring Tax Cuts

• Congress’ overspending has contributed to a high unemployment rate of 9.8%
• Low income people who depend on government social programs will be able to get more benefits
• The idea of tax cuts was for boosting the economy. The business owners were supposed to hire more and therefore increasing the employment however if the demand is still not there business owners will not hire more employees
• Tax cuts increases the country’s deficit

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Con Side Continued

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• Tax relief was meant to create new jobs
• Had promised “real and immediate benefits to middle-income Americans”, this did not happen
• Increased national debt, adding $2.5 trillion in debt
• Most small businesses don't make over $250,000 a year, so they would not be affected by the expiration
• 99.97% of the U.S. population earns less that $1 million a year

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References

"2 Tax Cuts for the Rich That Affect You Today." The Balance, 19 Aug. 2010, www.thebalance.com/president-george-bush-tax-cuts-3306331.

“Should the Bush tax cuts for upper-income Americans be allowed to expire?” Congressional Digest, January 2011, Volume 90, Issue 1, pp. 10–31

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