President George W. Bush’s tax cuts are set to expire on December 31st. While Democrats labeled these temporary tax cuts as “only for the rich,” these expiring cuts will drastically impact the middle and lower classes in America. The U.S. Congress should pass an extension of these tax cuts at least for those in the tax brackets below $100,000. The reality of the situation is that 85% of Americans earn less than $100,000 per year, and only 5.5% of Americans earn more than $150,000.
I have put together a chart of the current tax rates to compare them with what they were before the Bush tax cuts, and it’s below. As a college student, my tax rate is at the current 15% rate, and would increase over 60% to 25% if these tax cuts are allowed to sunset.
|Tax Rate w/ Bush Cuts||Income Level||Federal Taxes Paid||Tax Rates beginning Jan. 1, 2011||New Federal Taxes Paid|
The national median (where half of the population makes more and half makes less) is $44,389, according to Wikipedia. Under the old/new tax rate, someone earning the median income would be paying $1,331 more in federal taxes alone per year. In today’s economy, that is a significant amount of money, and shouldn’t be discounted.
The “Bush Tax Cuts” also did a myriad of other items including a higher capital gains taxes, dividend taxes, phasing out of itemized deductions, exemptions, among others. I have yet to be convinced that raising the capital gains taxes and dividends taxes would effect the middle/lower classes. In order to begin to reduce the deficit and national debt, we need to look at how these taxes impact the average American.
President Obama, Congress, and more importantly Republicans that speak of being fiscally responsible should consider dedicating at least a portion of this added revenue to paying down the national debt. As a country we must do a combination of two things: cut costs and raise revenue. While I am very opinionated on ways to raise revenue, there are ways to do this. However, I do believe that when the government begins a program (whether a social program, military spending plan, or expanding the government’s role in something) it is incredibly difficult to keep costs under control.
Congress should not play partisan politics with people’s taxes and extend at least portions of the “Bush tax cuts”. Extending it will allow people to keep more of their own money, something that is important in economic challenging times. It is also an opportunity to make a dedicated, focused effort on lowering the federal deficit.