The main difference between the Bush tax cuts and the Obama tax strategy

As initially scheduled when they were enacted, the Bush tax reductions expire around the finish of the year. Those making $200,000 years and above would bid farewell to the Bush tax cuts under Obama’s suggestion, when everybody else gets a two year extension. Democrats hurting America by raising taxes during a recession is a key Republican talking point. Obama uses shortage reduction as his rationale for leaving people considered rich out of the tax cut equation. Whether or not stretching the Bush tax reductions for every person or just the middle class will spur growth or reduce the shortage is a moot point to some experts, who do not consider either approach a solution. But the debate is suspended for now. Because the issue involves taxes, it would be expecting a lot for Democrats for making a stand on the issue until the midterm elections are over. Resource for this article – Facts about extending the Bush tax cuts and also the Obama tax plan by Personal Money Store.

A good look at the Obama tax strategy

It’s possible that discontinuing the Bush tax cuts for the affluent will not hurt them as much as the GOP contends. Some of the information were made evident by Bob Williams writing for the Christian Science Monitor. He writes that to ensure not a soul making less than $200,000 gets a tax increase, the Obama tax strategy extends the 28 percent bracket. That provision could result in a lower tax bill for even some of the more affluent taxpayers. It also provides a small cushion against higher taxes for individuals just over the $200,000 threshold. According to a study by the Tax Policy Center, Obama’s proposal to rescind the Bush tax cuts for the rich will increase rates for just 1.7 percent of working class individuals. Williams wrote the reason nearly 95 percent of that 1.7 percent would pay more is not as a result of ordinary income. They get hit when the tax on capital gains and dividends goes from 15 to 20 percent. If the Democrats call the Republican bluf! f and also the Bush tax reductions go away, the wealthy will end up paying a top rate of 39.6 percent on dividends.

Why tax cuts could be the wrong idea

To spur the economy into growth, tax reductions are heading in the wrong direction, said Diane Lim Rogers on CNN . Tax plans from both parties, she contends, commit the United States to a future of shrinking government revenues, less saving and long-term economic malaise. While Obama says raising taxes on the rich will save $700 billion over 10 years, the savings is just a fraction of the $2.2 trillion cost (not including interest) of stretching the Bush tax reductions for everybody else. To solve the unemployment problem, Lim Rogers writes that increasing the deficit by financing public projects makes much more sense than simply cutting taxes. Most importantly, she writes, a temporary extension of the tax cuts won’t solve the long-term deficit problem. Lim Rogers is doubtful that the government can be counted on to let the extended tax reductions expire, particularly when elected officials refuse to do this now.

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CS Monitor

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CNN

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