What happens if the Bush tax cuts Expire?
It kind of depends on whether they expire for everybody or just the top 2% of Americans. Many would argue that they need to expire for the top 2% in order to avoid more deficits in the future, i.e.. , without the income from the increased taxes on the richest Americans, the government will have huge spending shortages. Others argue the tax cuts have worked by creating a trickle down stimulus and they should continue. That argument makes little sense to me when you look at our current economic picture.
I believe that if the cuts are to continue for the wealthiest Americans, the loss in revenue can only be justified with an equal cuts in programming. That would take a joint effort on the part of Congress, and would require huge cuts in one of our largest budgetary items...DEFENSE. So if the Republican's want the wealthiest Americans to continue to get the cuts, they need to agree on cuts to defense spending. Education, Social Services, (excluding social security, which nobody can touch), and various other governmental programs don't compare to the money spent on Defense.
Both Republicans and Democrats favor an extension of the tax cuts for the middle class. Where they differ is whether to extend the cuts for Americans in the top 2% of taxpayers.
Among other things, if the Bush tax cuts were allowed to expire, the following would take place:
1. Tax brackets would change, from 10%, 15%, 25%, 28%, 33%, and 35% to 15%, 28%, 31%, 36%, and 39.6%.
2. Long-term capital gain tax rates would rise from 15% to a maximum of 20%.
3. The child tax credit would be lowered.
4. The alternative minimum tax would cease to be indexed for inflation.
5. The marriage penalty would be reinstated
Thus, there is a lot at stake here. Whatever is decided, it must be tied in to lowering governmental spending. Otherwise, we will create an even greater deficit for the next generation.
