Are there tax cuts in the stimulus bill?
Seems like a simple question, yet the answer differs depending on the source. Firstly, we must at least agree on a definition of tax cuts before we answer the question of what is contained within Spendulus.
A tax cut by definition is a payroll reduction where a taxpayer pays less per a certain bracket. It can last for a number of years and could expire, but only this particular arrangement can be classified as a tax cut.
The stimulus bill currently being debated in the Senate does not contain tax cuts according to the definition. Instead there are two items that can be best described as tax relief.
AMT Tax Patch: This patch is to prevent the Alternative Minimum Tax from hitting the middle class. Congress has been patching the AMT for the past 10 years, because it unfairly targets the middle class, not it's original intention. Because this patch has been a commonplace piece of legislation for the past 10 years does not improve this bill's tax relief capability.
Tax credits: Tax credits are one time, in this case two time, rebate checks. As you may remember with Bush's approval Congress released a rebate check programs where each American making less than $75,000 received a $600 rebate check. Idea being that these rebate checks will cause an infusion into the economy to incentivize people's spending habits. A backbone of Keynesian economics this would not jump start a battery, let alone an ailing economy like of 2008. Let us also remember that these tax credits or rebate checks will be provided for everyone making less than 75,000 even those individuals that pay NO federal tax credits. This already has been discussed ad museum, but it is important to remember that funnelling money that America does not have to "rebate" individuals who pay no federal taxes is a grave mistake and can be best described as a welfare check.
There you have it folks, NO tax cuts in this bill. In case you are not of the supply-side economics persuasion allow me to briefly explain the difference between a tax cut and a tax credit. A tax cut that affects brackets is something that individuals and small businesses can plan around. If you know that in the next 7 or so years you will keep a certain amount of money more than you were previously keeping you will make plans. You can either purchase a large items like a house or car, or perhaps try your hand at starting your own business or perhaps even invest in the market.
With a one time jolt you are more likely to take the money and simply pay off credit card debt - which is not bad per-se or simply put it in the bank for a rainy day. In fact when the Bush tax cuts expire, and they were effective do not let anyone tell you otherwise, the expiration will be a tax hike. As Obama proudly announces we will all go back to the taxes of the 90s, back when the economy was booming and things were wonderful. In fact the expiration of the cuts will have a reverse effect as people will clamp down even further knowing that more of their money will be going to the federal government.
A tax cut by definition is a payroll reduction where a taxpayer pays less per a certain bracket. It can last for a number of years and could expire, but only this particular arrangement can be classified as a tax cut.
The stimulus bill currently being debated in the Senate does not contain tax cuts according to the definition. Instead there are two items that can be best described as tax relief.
AMT Tax Patch: This patch is to prevent the Alternative Minimum Tax from hitting the middle class. Congress has been patching the AMT for the past 10 years, because it unfairly targets the middle class, not it's original intention. Because this patch has been a commonplace piece of legislation for the past 10 years does not improve this bill's tax relief capability.
Tax credits: Tax credits are one time, in this case two time, rebate checks. As you may remember with Bush's approval Congress released a rebate check programs where each American making less than $75,000 received a $600 rebate check. Idea being that these rebate checks will cause an infusion into the economy to incentivize people's spending habits. A backbone of Keynesian economics this would not jump start a battery, let alone an ailing economy like of 2008. Let us also remember that these tax credits or rebate checks will be provided for everyone making less than 75,000 even those individuals that pay NO federal tax credits. This already has been discussed ad museum, but it is important to remember that funnelling money that America does not have to "rebate" individuals who pay no federal taxes is a grave mistake and can be best described as a welfare check.
There you have it folks, NO tax cuts in this bill. In case you are not of the supply-side economics persuasion allow me to briefly explain the difference between a tax cut and a tax credit. A tax cut that affects brackets is something that individuals and small businesses can plan around. If you know that in the next 7 or so years you will keep a certain amount of money more than you were previously keeping you will make plans. You can either purchase a large items like a house or car, or perhaps try your hand at starting your own business or perhaps even invest in the market.
With a one time jolt you are more likely to take the money and simply pay off credit card debt - which is not bad per-se or simply put it in the bank for a rainy day. In fact when the Bush tax cuts expire, and they were effective do not let anyone tell you otherwise, the expiration will be a tax hike. As Obama proudly announces we will all go back to the taxes of the 90s, back when the economy was booming and things were wonderful. In fact the expiration of the cuts will have a reverse effect as people will clamp down even further knowing that more of their money will be going to the federal government.
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