There are two words in the English language that when combined will cause immediate joy and skepticism at the same time. Tax Cut, although at first it sounds only good there can be some setbacks. George W. Bush entered his term in office with an aggressive agenda to cut taxes that turned heads in his favor; however, some people don't think his cuts are fair or effective. The United States economy is slowly creeping towards a recession. The stock market has shown repeated drops.
Consumers are not purchasing and even savings and loans are down for fear of a huge economic crash. The only bright spot is a housing market that refuses to yield as apparently consumers are still positive enough to purchase houses. Despite the actions of the Federal Reserve and Alan Greenspan the economy is in a tailspin that is highlighted by the drooping stock market. Greenspan has cut the interest rates three times since the start of the new year and yet consumer confidence and the nation's financial situation continue to slip. President Bush has concluded that only a massive tax cut will level out the economy and help to rebuild after the damage done lately. Bush wants to put money back in the hands of the consumer by making sure every social level is included in his cuts.
The Presidents tax plan will lower the marginal tax rate for low income parents thus allowing, in theory, lower class citizens to join the middle class. The tax cut plans to give the largest percentage reductions to lower income families. The Federal Income Tax is the highest it's been during peacetime ever. This puts a major strain on families to work harder to provide for themselves and their children.
Bush plans to lower the tax burden on families by reducing tax rates, expanding child credit, and reducing the marriage penalty. Also, to promote charitable giving, the President has allowed for a clause which will allow the taxpayer to deduct his or her charitable donations from their taxes. This budget plan also includes ideas that will allow the common American to pay down his debts thus lowering the consumer debt. When taxes are cut the common man can pay back what debts they may have. This is very important because consumer debt is now over $1. 5 trillion and credit card debt alone will be over 600 billion dollars.
That equates to, on average, about $2, 000 dollars per American. Another positive change the President looks to in act is the lowering of the death tax. The tax is extremely high and is attributed to thousands of businesses and small farms going bankrupt after a death of the owner. His plan is to totally cut 1.
6 trillion dollars in the next ten years and he even leaves open the possibility of a 60 billion dollar reduction this year alone. Bush is confident that this plan is sound and very workable thanks to a 5. 6 trillion dollar surplus that is being predicted. Overall the Bush plan would reduce marginal tax rates for about 2. 9 million of the 13. 9 million working families with children that now get the earned income tax credit.
Another 2. 6 million families would get tax reductions or large tax rebates even though their marginal tax rates would not be affected. the current federal income tax system does not tax the earnings of low income working families with children, but this is only true for very low income families, the lowest five percent in fact. Bush's plan would increase this to about the lowest eight or nine percent.
Bush states that his plan would encourage hard work in the average American household because the more overtime a person works the more their taxes are cut on that extra pay. Many Americans hope that Bush's plan will be passed and that they can enjoy one of the largest tax cuts in recent history. Economists are hoping that the cut is just what the economy needs to jumpstart the consumers. Despite the mainly positive outlook towards Bush's new plans many economist are very skeptic of the impact on the future of the United States economy that Bush and his cronies predict. Immediate tax relief to Americans will not be an easy task. Bush must unite a divided Congress to help pass his optimistic cut.
Democrats are not agreeing with Bush's solution to the current economic problem. They believe that his cuts are too large and biased towards the upper class citizens. Another complaint of the new budget plans are that by the time the plan has made it's way through the bureaucracy that the taxpayer will have lost all the benefits originally planned for them. Yet another criticism goes along with the argument the Democrats are making. The average man is afraid that the tax cut would be mainly directed at the upper quarter or more of society. They have reason to fear.
According to one analysis taxpayers in the lower sixty percent on the income scale would only get eleven percent of the cut. This amounts to about $249 on average for people in that bracket. It has also been stated that the lowest twenty percent would only get a cut equivalent to, on average, forty three dollars a year! On the other side, the top ten percent of all taxpayers would get a whopping sixty one point six percent of Bush's proposed tax cuts. That amounts to about $8, 362 per taxpayer in the upper tenth of society. The plan has been said to be, "overrated", "irresponsible", and "costly." This plan also scares another large group in America, the elderly. The massive cost of Bush's proposed cuts would probably delve into an already shaky social security system.
The last few years experts have been predicting a possible collapse of the United States long standing social security system. Bush's proposed budget plans could turn the current surplus into a massive deficit that the US could have a very hard time recovering from. The tax plan would take as much as three-quarters of the ten year projected social security surpluses. Bush says that he will maintain the current government surpluses while initiating these tax cuts but economists don't see this as a possibility. They say that it would be impossible seeing as how his plan would cost about 1. 8 trillion dollars plus about 268 billion dollars in interest costs in the next years.
With that kind of spending there is no way the economy could grow enough to cover the costs of this plan and many established systems like social security could fall to where they are practically non-existent. Consumers may not be to pleased with the cut either. The cut may have the effect of just balancing the economy not giving it the thrust it needs to begin to grow at an extended rate. Thus the cuts would be only a temporary cure for the endangered economy.
The two sides of Bush's budget plans may disagree so much as to not let his plan pass. This could cause chaos for a while within the United States but in the end economists might agree that we " re better off because Bush's plans may lay waste to an established system that has made the United States the number one world power for so long. Whether or not Bush's budget and tax cut plans pass it will be a radical time in the history of the United States. The cuts may save a floundering economy or bring it to it's knees. What the future holds no one knows for sure but everyone is anxious to see how Bush will fare in office..