Tax Cuts
Andrea Rios
Liberty University
ECON214-B04
September 17, 2014
Dr. Bouchet

A tax cut is a reduction in taxes. According to Gwartney, Stroup, Sobel and Macpherson (2014), tax cuts are less likely to change the composition of labor demand and increase structural unemployment.
The article, "Extending tax cuts isn't a political slogan - it's an economic necessity..." by Coleman, Norm (2010) talks about the necessity of having tax cuts. This article suggest that’s we need to stop out of control spending and learn to budget; “we need to zero in on restoring fiscal sanity by passing a constitutional amendment to balance our budget (Coleman, 2010).” People need to learn how to live within their budget. Most times people like to impress and go broke trying to impress people. They like to live a life that does not fit their budget and can risk not paying rent (being homeless), have little or no food (hunger) and even going broke just to get something. What we need to focus on now is giving investors the incentive to make investment in America again by extending tax cuts (Coleman, 2010). With this in mind a tax cut can stimulates spending, increasing aggregate demand and lowering people's need to utilize cash as an asset.
I believe that cutting taxes when the economy is full at its employment rate would mean that you have to pay off the interest of that debt. Needless to say, if the debt is huge then it would make little sense to borrow if at this time you don't really need to. Cutting taxes does necessarily mean it will boost the economy. In fact, there is probably going to simply put pressure on prices and interest rates. In no way will it increase growth in any way. In another case, if the economy is in recession then we would be able to benefit from a tax cut. A tax cut to the poor would be better since the poor spend more money than a rich person. In this case, increases in government spending are more reliable since the government does not save at all. A tax cut on a business or rich person does not make them work any harder than they have to. A tax cut on wealthy would however, make them spend more. Therefore, to sum it up a tax cut in a recession can generate more revenues because it increases aggregate demand and income. However, a tax cut in a recovery does not generate more revenues because the economy is already at full employment. Instead, what will happen is you get higher prices and interest rates.
Taxes is not a new topic when we discuss it in Biblical terms. Taxes dates back long before we thought; 2,000 years ago or so. The Bible openly speaks about paying taxes and how that is a must. In Romans 13:6-7, it states “For because of this you also pay taxes, for the authorities are ministers of God, attending to this very