References……………………………………………………………………….........page
Strengthening the Economy
Introduction Economists are asking the question, can cutting taxes improve the economy? What is needed to boost spending? And how do we strengthened the economy and get it back moving?
Tax Cuts
Did you know that Congress passed a tax cut bill in the year 2004 and people making $1 million earned an average $123,600 tax break? That’s nearly 54 times as large as the $647 tax cut the average middle-income household received. The tax breaks for the wealthiest continued to grow from the year 2001 to 2003. This year the government unveiled a tax bill that will give a tax cut to 95% of working people and reduce the tax cut advantages for the wealthy. I said that to say this, a lot of people don’t realize that cutting taxes could have just the opposite effect on the economy depending on the person’s household income.
Keynesian Economics suggest that lowering capital gains and tax rates only benefits the rich and that the “trickle-down” effect of increased spending and investment does not take place. In fact, lowering taxes reduces the amount of revenue available to government programs and places an increased burden on the states to provide assistance. This leads to an economic disparity and an economic downturn.
In today’s marketplace, the super-rich have become richer in part by destroying jobs. Who is really spending? And what are they doing to help the economy. The rich account for a hugely portion of the consumer activity. As Citigroup equity strategist Tobias Levkovich noted in a recent
