What are TAX CUTS (America)?
could someone please explain to me in layman's terms what are the tax cuts?? Are they good or bad things? who do they help, who do they hinder, why do some people want them and some don't?
- MuttLv 710 years agoFavorite Answer
"Tax cuts" is when you cut back the amount of tax that needs to be paid. Is it good or bad? In some ways, it's good. It puts more money in the pockets of the consumers to spend how they see fit. And in some ways, it's not so good. With the debt piling up, it is taking money away from the government to pay off the debt.
Personally, I don't think the debt should have ever got to the point it is now. But it has, and something has to be done about it. The obvious thing would be what you and I do if we have a lot of debt: Cut back on what we spend our money on so we can pay down the debt.
.Source(s): We don't have an income problem in this country. We have a spending problem.
- ikeman32Lv 610 years ago
To me a tax cut is the lowering of the tax rate, for example: a rate of 40% gets lowered to 38%. That's a tax cut.
To the government it is a more complicated system of shifting the tax ceilings for the various rates and tax credits. For example: a person who is taxed at say 20% because he is passed the ceiling of the next lower bracket of say 15%. Now enter a "government tax cut" that raises the ceiling to say 26 thousand, in effect lowering his tax burden.
A tax credit isn't really a tax cut it is simply a forgiven amount of tax that you would otherwise owe. For example: Say you owe 2 thousand in taxes but you are entitled to a tax credit of 500. Essentially the government has forgiven 500 of the 2 thousand and you now owe 1,500.
There are two schools of thought in regards to taxes. If you cut taxes the economy will grow thus providing more tax revenue. This requires a larger volume of spending on the taxpayers part for it to work. The other school of though is that the rich should pay the largest burden of taxes and thus have higher taxes. The higher the taxes the more more tax revenue will come in. This requires the same level of spending upon the taxpayers part.
The problem is that both side are fiscally stupid and greedy as heck. Oh yes Democrats are just as guilty of greed as the Republicans and just as financially irresponsible. See both houses of Congress are under the mistaken impression that they are in control of the economy. While it is true that they do have a "marginal" amount of control, they by no means have control of the economy in the way they think they do. The real controllers of the economy are the ones with all the money, the rich.
The rich are the ones that make the money move, people can deny this all they want but it won't change the fact that the rich are the ones in control of the economy. If not for the rich, the economy will stagnate. Call it greed, call it evil, call it what ever you want to it is an unavoidable fact.
- Anonymous10 years ago
Tax cuts reduce the amount people and or businesses have to pay in taxes (money paid to the government). There are several types of federal taxes addressed by this subject. Among them are the so called Death/Inheritance Tax, The Personal Income Tax, and the Capital Gains Tax. Taxes are where the government gets its money. When speaking of economics with reference to government in the U S there are three basic columns under which capital fall. They are Revenue (money taken in from taxes), Spending (money going out or spent by the government), and Deficit/Surplus (in the case of one fiscal year), or Debt/balance on hand (in the case of all time). If you never spend any money you don't need any taxes. The more money you spend the more taxes you need. If you spend more money than you receive in revenue for a fiscal year you incur a deficit. That is added to the national debt. You write that in red in the balance column. A surplus is subtracted from the national debt. We need to have more surpluses in order to reduce the national debt. The best way to reduce debt is to reduce spending. Honest. That is what any financial consultant will tell you if you are having personal financial trouble. The debt hinders everybody. If allowed to bankrupt the nation there are no national payouts possible. With the debt being what it is all payouts currently come from borrowed money which further increases the debt with no additional spending because interest is paid on borrowed money. Interest adds up to the cost of the loan.
Reducing taxes allows more people to have spending money. Spending money adds to the economy and causes a demand for products and services. The demand causes the need for people to produce these products and services and the demand for employees is felt by businesses. More employees pay more taxes and that makes more revenue and that reduces deficits. Only a surplus can reduce the debt. A balanced budget is where the revenue and the spending are equal. This works for any kind of budget. We need to have more students learn this and more adults and politicians practice this.