The lame duck Congress recently voted to extend the so-called "Bush-era tax cuts." The extension is the product of a compromise made through negotiations between President Obama (while not actually a congressional voter, he is the leader of the Democratic party, so Democrats follow his lead) and Republican leadership in the Senate. Click here for an illustrated representation of the deal and the failed alternatives.
Understanding these tax cuts are far more critical than simply knowing how much your family owes the government. Taxes represent one of the most fundamental and significant differences between our two major parties. To simplify, Democrats want progressive taxes that tax the rich at higher rates so that the government can provide necessary services while the Republicans believe in a more standardized, or "flat" tax structure that taxes similarly across incomes, so that the rich might stimulate the economy. Underlying this divide is a philosophical division: Democrats believe the government spends tax money most fairly and appropriately, while Republicans believe this money is spent best by the earners.
Where do you fall in regard to these divisions? What do you think is more important: tax breaks for everyone? Tax breaks for the middle and lower classes only?
The ideological division remains when we move to the topic of reducing the deficit. To reduce the deficit, do you think it is better to reduce spending or increase revenue? You balance the budget and decide which you favor. After you have balanced the budget on the interactive website, report back to classmates sharing whether you preferred cutting spending or increasing revenues and why.
Although breaking a deal with the GOP ended up proving to be necessary (if Obama hadn't made the deal, an agreement probably would not have been made by the end of 2010, resulting in exorbitant tax increases across the board as a result of our tax system going back to pre-bush levels), I do not believe that is the best way to go about handling our tax system. Our economy is crippled (yet still recovering) and as we have seen throughout history, the trickle down theory does not always prove to be effective during bad economic times. Believe it or not, the rich are also intimidated by the economy, and unless you are Kanye West, you are probably not going to be shredding as much discretionary income as you would during positive economic times, no matter what tax bracket you fall in. But at the same time, the super rich are not going to starve any time soon, so by dishing out tax cuts to them, we are simply padding up their 401(k)s and hedge fund investments, which is not how you heal a damaged economy. This road runs two ways however, and i believe that during positive economic times (watch the gold bubble we are about to enter), tax breaks for the super rich can be a very positive way to increase the strength and stability of the economy, because that is when more discretionary income is injected into the economy, thereby increasing money flow and adding to our overall prosperity as a nation. We need to invest in our disappearing middle class by providing as many benefits and incentives to them as we can. We have seen little change in upper class jobs, and an increase in blue collar jobs, but we are actively losing white collar jobs, and our middle class is going with it, and the middle class has been the single greatest contributor to our economy in our history, so as i have implied and even stated, i believe the goodies should go right to the middle. As far as balancing the budget goes, i have seen from the budget puzzle that there are a lot of ways to decrease the deficit, such as by cutting the size of our government and military from exorbitant sizes, to smaller (yet still perfectly functional) sizes, and not have to resort to frivolously increasing taxes for people that do not need to see their taxes go up, specifically during times like this.
ReplyDeleteI've always thought a high, flat tax rate is best, like in Denmark. But this is America, where we are mega-consumeristic and have a huge range of incomes, so that probably wouldn't work. I have a hard time believing in tax cuts for the rich even though like Firas said it would probably help stabilize the economy for now. It seems awfully risky to give the wealthiest people tax brakes, because it might not even work. On the other hand, raising taxes is a sure way to increase revenue. It's not as risky, and to me, anyone who owns a $3.5 million estate ought to pitch in a little more than the average citizen. I balanced the budget on the website mostly by passing progressive tax measures. It seemed fairer to require the super rich to help spike the economy rather than cut cut cut everywhere, because you know that even the most demanding taxes for the high income levels isn't going to put them on the street; when you cut who knows who you'll end up affecting?
ReplyDeleteI fall in the middle of the political spectrum in these matters. I believe that everyone should have an equal opportunity, thus I believe in the equality of opportunity. And just like most Americans in our political culture I want the successful people in this country to be rewarded on their hard work, I believe letting the rich have a tax cut can be good for the economy up to a certain extent. However I feel that not everyone is equally given the chance to succeed thus I wouldn't approve of any tax cuts. And the rich seem to just keep getting richer and I haven't seen a big correlation in my opinion of how the rich have helped out the economy. I have a feeling our economy just favors the rich as of now, and in hard times the going gets tough. I am split evenly on the thought of the Bush-Era tax cuts. I believe that there should only be tax breaks on the middle and lower class only, however the people in higher class have worked hard for their position in life thus they should be taxed a little more definitely, but not up to that would seriously damage them. We should definitely help out everyone and I believe that the rich can help us out by handing over some of there, but yet the economy needs help right now. This deficit is only getting bigger I believe that we need to reduce spending to cut this deficit down. I think that the troops need to come back home. I realize that it is tough, but then putting or even cutting back on Medicare would really help us out. By 2030 it is projected that we will spend $562 Billion on Medicare, and this could even be a slower change, just as long as we don't have to spend money. However I believe keeping the taxes high could really help us out, we need that money and taxes is one way it could help us out. I believe taxing on carbon could really help us out also it would help out the environment. Adding a tax on consumption I believe in also as it is present in many other countries, and then canceling or delaying weapon programs could really help us out also. As we have a great military and it could really help out in the short term run. These are some things I would just start on to help solve our deficit.
ReplyDeleteI think that it is better to tax the rich at a higher rate because, like Firas said, the trickle down theory won't work if they don't spend as much money during a recession in the first place. I think that taxes are a much better way to restimulate the economy because when you cut spending, you cut jobs, which is overall worse for the economy. When you raise taxes, all Americans do their part and you can get a much better result. Many people would much rather have less taxes, but what do they do with the extra money? Many people would just save it. While we are in such a recession, we have to put more money into the system, and that is what the government does with our taxes. When we have a stable economy is when we need to have the tax cuts so that people can spend their money how they see fit.
ReplyDeleteAlthough tax cuts for all income groups is favorable, I think those people with a higher income should have a higher tax rate than those of the middle/ lower income groups. In regard to these divisions, I think tax cuts should only be extended to the middle/ lower classes. I agree more so with the view of progressive taxes that tax the rich at higher rates so that the government can provide necessary services to the people, but I don’t believe that the upper class should be “excessively” taxed. I do believe that the top earners in the United States should have a higher tax rate percentage. Tax breaks for everyone will cost the government an estimated $900 billion for the two-year plan; so extending the “Bush-era tax cuts” will result in even more of a deficit. Although the new tax rate for the top 0.1% and top 1% of income groups only lowers the tax rate percentage by 0.4% and 0.7%, these extended tax cuts will greatly lower their tax payments (an estimated -$19,896 and -$6,062, respectively). These tax cuts will increase our national deficit. In regards to reducing the deficit, I think that both cutting spending and increasing revenues will have to be used, and relying solely on one or the other would be extremely difficult. Only cutting spending would take away from many of the favored and popular government programs such as Medicare and Social Security. These programs are important to the health and security of many citizens. Only increasing taxes is also unfavorable because large tax increases would be hard on our economy, as people would spend money more conservatively. To balance out the two ways, I think having a greater cut in governmental spending and a very slight tax increase would help reduce the deficit.
ReplyDeleteI think that tax breaks for the middle and lower classes will benefit the economy more than tax cuts to the upper class would. It seems to me that those who are better off than the rest of the country should be able to contribute a little more than the people who are living in poverty. Tax cuts to the rich could help stabilize our economy, but only if the upper class is spending that money. The trickle-down idea may work in theory, but many people in the upper class that have been receiving tax cuts in the last decade or so are saving that money. In other words, it only works if people with more money spend their money, which really isn’t happening. I don’t really agree with cutting spending either. Occasionally some programs can afford to be downsized, but generally these programs are necessary to our country. When spending is cut for certain programs, these programs also tend to have to release employees. I guess that you could say cutting spending equals cutting jobs, which definitely isn’t going to help stabilize our economy.
ReplyDeleteI have a strong Democratic view, in which I believe the government spends the money fairly and appropriately. I also have the Democratic view that the wealthier should be taxed at a higher rate than the middle and lower classes. This way, the government will earn more of their money from those who have it than from those who need it to live and get by. The tax cuts to the wealthy don't help any. When the economy is low, the wealthier tend to guard their money even closer and spend less of it. On the balancing the budget puzzle, I was 56% savings from tax increases and 44% savings from spending cuts. Many of the tax increases I had were to raise taxes for the wealthy, which can again be tied back to my democratic values. Many of the spending cuts that I had were in reducing the role of the military, which is one of the main reasons why this nation went into so much debt to begin with.
ReplyDeleteI believe that the rich or higher class should be taxed at a higher rate. Since they have more money to give than those of the middle and lower class. Just lowering taxes in general for everyone wouldn't really do much because they would just save it instead of spending it. In order to help the economy people have to be putting more money into it. Also I don't think cutting spending would help much because like Maggie said it cuts job which makes thigs worse.
ReplyDeleteI agree with Democrats when it comes to taxes. The rich should be taxed at a much higher rate than the middle class. The rich do not need the amount of money they save by having lower taxes. To balance the budget you need to lower costs and increase revenue. I favored cutting spending because there is a lot more things you can cut. There will never be a balanced budget though because it would kill the economy.
ReplyDeleteThe rich should be taxed more they have disposable income. The regan era trickle down economics d
ReplyDeleteThe rich should receive less taxes than the middle and lower class because they have more dispensable income that can go to the government to use in projects the government would otherwise be forced to cut due too the budget deficit. While cutting spending can be a useful tool; it is much simpler to do than cutting military programs and other things that can affect our national security. It also takes jobs from middle and lower class adults who can collect unemployment from the government and cost it more than if they were employed.
ReplyDeleteI definately agree with some people when they say that the rich should be taxed at a higher rate because they obviously have more money and the Republicans often used exuse of the trickle down theory wont work. The middle and lower class also deserves the tax breaks and we would still have the tax money to spend because of the increased level for the rich. We dont wanna cut spending money because as many have stated this will make americans loose jobs which will just make the economy worse.
ReplyDeletei believe that the rich, while they have more income, should not have a wildly disproportionate tax rate, due to that limits their ability to go out and stimulate our crippled economy. however, the rates should be more evenly distributed throughout, to make a lesser burden on the lower middle class, which bares the load of taxation as a whole. but transferring a percentage point or two won't kill the upper class and it will help massively. whatever the real solution, the fact that america needs to lower deficits and keep spending money at hand will not change.
ReplyDeleteI think that overall, tax breaks shouldn’t be given to the rich, especially when the economy could really benefit from their earnings. Like Firas said, however, giving them tax breaks could be beneficial for the economy in the long run, if our economy wasn’t so bad right now. I also agree with what Shaefer said, that hard working people should earn more and be rewarded for their hard work. But overall, I think there are soooo many people in the world that make ungodly amounts of money, like actors and actresses and sports players, that they can deal with contributing a little more than the average person does in taxes. While playing that one game online, I realized that there are so many ways to try and re stimulate the economy and get rid of the deficit., but taxes are one of the best ways, in my opinion, to try to help. For example when spending is cut, it just makes things worse by creating more unemployment. By giving the rich as well as the middle class tax breaks, I feel like we’re just falling under the generalized theory that “the rich get richer and the poor get poorer”. Just tax the people who can afford to give up money. Im pretty sure that if an average person is walking through a street and drops a 50 or even 20 dollar bill, they would notice that they are missing money. Whereas some of these reality show ppl or actors or sports players could be walking along an drop a couple 100 dollar bills and not be bothered to turn around an pick it up. [slight over exhaduration..but you get what im saying.]
ReplyDeleteI agree with pretty much everybody else.The rich should be taxed at a higher rate because they have more to give. It's almost basic courtesy, for example the person with more gas in their car drives to mcdonalds or wherever. The Trickle down theory has been proven to not work. Yes we still need to tax everybody, but sensibly. Maybe to help reduce the debt we could stop the war in the middle east so we are not sending millions of dollars into a conflict that is going nowhere.
ReplyDeleteI think taxing the richer is a great idea because they have more money to spend on taxes then the poor do. I think that it should be like 2% of your yearly income for example and do that to everyone so that the richer get taxed higher. taxes are very import for grants and we must have them.
ReplyDeleteThe rich should be taxed more they have disposable income. The regan era trickle down economics does not seemto be working. It's time to end the bush tax cuts. They just won't last long term, even if they worked before, I think that we have reached a new state where the rich aren't spending the money they save from taxes. Seriously they get away from taxes enough already through Swedish banks and corrupt behavior.
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