Bush tax cuts include the tax cuts that were enacted in the years 2001 and 2003 during the George W. Bush presidency. December 31st is the date the tax cuts will expire. According to Graham (2010) the extension of the tax cuts would be a reprieve for tax payers. The bush tax cuts brought down capital gains, dividends as well as income tax rates. The tax payers who will benefit most for extension of the cuts include the working poor, parents as well as couples who are married. Failure to extend the tax rates essentially means that the tax payers will have to contend with increased marginal tax rates. In addition to that, we would have expanded tax credits eliminated in addition to higher tax rates for couples who are married.
It is important to note that the extension of the tax cuts has become hotly debated as democrats push for their expiry and republicans maintaining that the cuts should be extended. The debate has been brought about mainly due to some perceived myths regarding what would accrue if the cuts were extended or not. For instance, while others are of the opinion that extending the tax cuts would inform the stimulation of the economy, others interpret the extension of the same as a bane for the economy.
While the president’s position is that the cuts should not be extended to ‘the wealthy’, the administration is of the opinion that the cuts will cost the U.S tax payer about $61.8 billion a year. When it comes to the tax cuts that would be extended to everyone else, their cost to the U.S tax payer is expected to hit close to $157 billion per annum.
Graham, J.D. Bush on the Home Front: Domestic Policy Triumphs and Setbacks. IndianaUniversity Press. 2010
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