The Bush tax cuts are set to expire in January of 2011 and there has been much debate about whether or not it's a good idea to extend them. As I'm sure many of you are aware there was much teeth gnashing on the Democrat side when they went into effect. The supposition was that it was a tax cut for the rich and a Very Bad Thing(tm) at the time.
Ironically, some Democrats have begun to re-examine their original opinion and have urged the president to extend the 15% tax rate on capital gains and dividends that will revert to 20% and 39.6%, respectively, next year. The reasoning is that the tax cuts will encourage investment that stimulates growth and job creation. This reasoning has been strongly echoed by the GOP party and for many seems to be the most logical step to take.
On the other side of this coin, David Stockman (who served as President Ronald Reagan's budget director) completely disagrees with that stating the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing. Fairly strong words from a man who supports the foundational idea that tax cuts boost the economy.
So where does that leave us? Would these cuts boost the economy or will they bankrupt us?
CNN Money seems to think that they might have the answer. They state thatif the Bush tax cuts expire for the nation's top earners, people making a pinch less than the wealthiest Americans, who don't quite qualify for the new top two tax brackets, could find themselves in an even lower bracket next year.
To delve more deeply "under Obama's tax plan, the 28% income tax bracket would be widened. According to estimates from Congress's Joint Committee on Taxation, if your taxable income is between $171,850 and $195,550, you would fall into this "sweet spot" and be moved from the 33% tax bracket to the 28% bracket and could end up saving more than $1,000 a year."
This still leaves the 2% of the population that makes more than $250,000 a year being adversely affected if they aren't extended.
So what do you think? Do you think that extending the tax cuts are a good idea or a bad idea?