When it comes to the United States political scene, it is hard to be a politician. During this election season, there were two major issues that came to the forefront besides job creation . The issues? First, cutting taxes, because many people believe they are taxed enough already and they shouldn’t have to pay even more. Second, reducing the deficit as people fear we’ve overextended ourselves and that the national debt is too large. Looking attax cuts on business income increase aggregate demand by increasing
Tax Cuts on Business Income Increase Aggregate Demand by Increasing
If you look at these demands individually, it’s easy to see the predicament facing politicians. The first demand is to extend the tax cuts implemented during George Bush’s presidency. These cuts are estimated to cost around four hundred billion dollars a year, or four trillion dollars over the ten year period during which they were in place. As such, if we extend these cuts, we would essentially remove a revenue source for the government of about four hundred billion dollars every year going forward tax cuts on business income increase aggregate demand by increasing business income
At the same time, people want the government to balance the budget . In 2009, the United States government brought in 2.1 trillion dollars in revenue, and spent 3.5 trillion dollars. To satisfy peoples demands, the government needs to cut 1.4 trillion dollars from the budget. These changes would amount to a 40% cut in government spending, an almost impossible task considering that people also want jobs to be created.
Mixed Message of US Tax Cuts
In total, it’s a strange message being sent to the government. We’re demanding they become more fiscally responsible, reducing their spending levels and balance the budget. Yet at the same time, we’re asking the government to do it with less money, by demanding the extension of the Bush tax cuts. Combining these requests, we are asking the government to do more with less. In the end, it’s important that people recognize these demands in their full implications and ask what their highest priority really is tax cuts on business income increase aggregate demand by increasing.