Economics: George w. Bush and Real Income Essay example

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Bush Tax Cuts Assignment Due Oct. 26

Write an essay in which you address the questions listed below. Your essay will be evaluated not on the basis of what position you take but rather on how well you defend your position. The essay may be up to 1,000 words long. It should be computer generated and printed. Please proofread your essay to eliminate spelling and grammatical errors.

Bush Tax Cuts

The tax cuts enacted in 2001 and 2003, known as the Bush tax cuts, are set to expire Dec. 31, 2010 and the fight over what to do is increasingly heated.
Should the tax cuts expire, as some Democrats have said?
Should they be extended, as most Republicans maintain?
Or does the answer lie somewhere in between, as the Obama administration, led by Treasury Secretary Timothy Geithner, has argued in recent weeks?

During the George W. Bush Administration there where two major tax cuts which are also known as "The Bush Tax Cuts". First of all we need to get familiar with what a tax cut is, and what does it represent. A tax cut is a reduction in taxes in which the immediate effects are, generally , a decrease in the real income of the government and an increase in the real income of those whose tax rate has been lowered. With this in mind, I can now give an educated opinion to whereas "The Bush Tax Cuts" should be extended, expire or lie somewhere in between. So, I along with all of the Republicans think that the Bush tax cuts should be extended for all of the tax payers.

First of all I think that the Bush tax cuts should be extended because most of the time tax cuts provide individuals and corporations with an incentive for investments which stimulate economic activity. This means that when individuals and corporations get tax cuts their real income immediately increases therefore giving this individuals and corporations more money to invest in their own company or in new projects, which in effect creates a higher economic activity. In time, the rise of economic activity would generate additional taxable income which in effect would generate more revenue than the one that was first collected at the higher rate, therefore increasing the governments income.

Secondly we can take a look back in history and see that since the 1920s until George Bush administration their have always been tax cuts that have resulted in total tax revenues increasing as there is not only more income available to tax to the higher classes, but the fact that many jobs created are created for the people in the lower classes means that the number of new workers in the lower classes have increased the amount of…