Tax_Cut

Tax Cut A tax cut is often thought of as the magical solution to our economic problems, but a tax cut is not always what it seems. On June 7th President Bush has signed into law the biggest reduction in federal taxes since 1981. Some Democrats say the tax cut will divert revenues that the federal government needs to spend on education, prescription drugs and other priorities, but Bush says it will supply a timely stimulus to the economy. The Bush proposal would including reducing income-tax rates, easing the marriage penalty, phasing out the estate tax and boosting tax breaks for charitable contributions. In evaluating the impact of tax cuts on the economy, one must include both any potential positive effects from reducing marginal tax rates and the negative effects from reducing national saving. The overall impact of a tax cut on the economy thus is not necessarily positive. To determine whether tax cuts would raise or lower national productive capacity, one must look at estimates of the size of these offsetting effects. The Bush tax plan would reduce the average statutory marginal tax rate (that is, the average tax rate applying to the last dollar earned in the economy) by roughly three percentage tax, work, rates, cut, rate, marginal, laffer, effect, economy, revenues, revenue, must, higher, economic, since, saving, point, people, one, national, maximum, effects, after-tax, wages, rise, reduction, reducing, reduce, lower, less, income, impact, cuts, bush, taxes, significantly