How will Republicans pay for any new tax cuts if they should happen to get them?
Republicans want the Bush tax cuts extended and would like new tax cuts. How would they pay for them?
@jaker - I think somebody disagrees with your claim of increased revenues.
Besides, if you pay me less money as a worker, don't I have less household income???
@Big Ben - your neat theory might work except for a few things, not the least of which is there is no guarantee banks will lend that new money they hold from low taxes. They could sit on it as some are doing now.
Also, there's no guarantee businesses will hire American workers. They could expand overseas or simply likewise sit on it as many are now doing and have been doing with the Bush tax cuts. In other words, your theory doesn't include all variables.
Current events as of 2008 should be adequate proof that these kinds of theories often don't work in the real world. We have low taxes, high unemployment and a monstrous deficit. And it all began under the Bush administration and before the Democratic Congress that began in 2007 could create these problems. (Name me one thing the Democratic legislators did to create the current problems we have!)
- fireflyLv 61 decade agoFavorite Answer
The Bush tax cuts for the rich (top 2%) that the Republicans want extended was written by the Republicans in 2001. They put in the expiration date because it was required by Senate Rules for tax cuts being passed using borrowed money. All Bush tax cuts (100%) were financed with borrowed money – 2.4 trillion worth). The CBO (Congressional Budget Office) made it very clear this week that the long term picture for the economy (for the deficit) is very dark if this tax cut is extended without somehow paying for it. It would again be borrowed money that would add 3.2 trillion to our deficit.
Rep Sen. Mitch McConnell (Kentucky) stated on Meet The Press that you don’t have to pay for them because they are already in place and have been for the past ten years. Yes they have, but the tax code doesn’t have them in place for 2011! He also said he thinks it’s outrageous to suggest a tax increase in the middle of a recession (he’s talking about the top 2% of the country of which only a tiny number of those get much, if any money from running a business).
McConnell has in fact suggested how he would pay for the tax extension for the rich. He voted early this month (Aug 2010) for a bill that would quote “Decrease spending as appropriate to offset such permanent extensions.” How? By cutting from the Finance Committee. The only things the Finance Committee has jurisdiction over that could be cut to pay for the tax extension for the top 2% are Social Security and Medicare. Extending this tax cut would increasing the deficit tremendously and could, as in the past, raise interest rates making it tougher on small businesses.
- 1 decade ago
Tax cuts do not necessarily mean a reduction in revenue. Using initial common sense, one would think "Of course a reduction in taxes means a reduction in revenue. Taxes are what the government brings in and if you reduce that you reduce government income." But taxpayers, businesses and individuals, do not operate in a vacuum independent of government actions. What government does affects them greatly.
Lets use a small example to start off. On the far west side of Indianapolis there is a suburb in Hendricks County called Avon, which is just across the county line from Indianapolis/Marion County. Each county has a seperate tax rate. The Hendricks County rate is lower than the Marion County rate. If you drive down the highway heading towards Avon, you will notice that there are not many businesses on that part of Indy. But, as soon as you cross the county line, business is BOOMING! There are stores, restaurants, shopping centers, office complexes, movie theaters, etc, etc etc. Who is taking in more tax revenue? Hendricks County (Avon) of Marion County (Indy)? Lower taxes draws business and that is the reason Hendricks County gets more tax revenue from the Avon corridor.
But, when you have two options of course you are going to opt for lower taxes. How does the concept work on a federal level where there is no competition? We just have to go back to the idea that lower taxes are good for private sector (business and people). When the common man has more money, he tends to do one of three things with it. Invest it, save it, or spend it. All three are great for businesses. Investing it and spending it is self-explanatory when it comes to being good for business. Saving it is great for business because then banks have more money they can lend to people who want to start up or expand a business. Since banks would have more money, the interest rate (the fee for borrowing money) is also lower. When money is abundant in the private sector, the cost of borrowing money is relatively cheap. When money is scarce in the private sector, the cost of borrowing money, the interest rate, is high. With lower taxes, businesses can expand and new businesses can start. That means those businesses will need (more) workers. And established businesses can give raises to employees to entice them to stay rather than find one of those new jobs. Since more workers are needed, the unemployment rate will go down. You have more people being employed at higher wages.
But, what does that have to do with government revenue? Think about it. More workers mean more people paying income taxes with more income. Would you rather have 90 people paying 11% tax on $100; or 100 people paying 10% tax on $110?
Lower taxes and you will expand the tax base. If you reduce one of the multipliers in the tax equation(tax rate), you can increase the other multiplier (tax base) by a whole lot and the end product is great for everybody.
- Anonymous4 years ago
Why make those paying almost ninety% of all taxes pay extra with the aid of fact of you lazy Democrats breeding 4th and 5th technology welfare recipients? permit's punish fulfillment reason they earned extra effective than you... I have been given extra ineffective Y/A factors than maximum so could I be compelled to resign my factors to you to make issues equivalent? I worked for my ineffective factors and can desire to maintain them and in case you desire the comparable put in the artwork and earn them!
- 1 decade ago
By increasing tariff on imported goods especially the ones coming from china to protect the national industry.
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- Anonymous1 decade ago
Tax cuts mean less revenue for government. That being said they should not create budgets with that money included in them. Oh wait ...... there is no budget.
- MehLv 71 decade ago
By reducing the spending to 2008 levels.
- Anonymous1 decade ago
Again: tax rate cuts ALWAYS result in increased revenues. You don't have to pay for them. You just have to avoid spending the new revenue.
- 1 decade ago
I know right, Plus if the Bush Tax Cuts were so great? How come there was no major jobs boom? It would be stupid to keep them they never did anything.
- 1 decade ago
easy, reverse Obamacare and all of the frivolous Washington spending...this CAN be done, it's a concept called zero-based budgeting
- timespiralLv 41 decade ago
It is so hard being rich these days. There is no sympathy when you have to choose between a mercedes fully loaded or going without the sunroof. It's an outrage that the rich have to suffer like this! Is there no humanity or compassion left?