President Obama and congressional Republicans meet in order to find "sensible common ground" on their dispute over whether George W. Bush tax cuts should be extended, and if so, should they extend for wealthy Americans as well.
Obama would like to preserve the existing tax rates for middle class taxpayers. Obama oppose tax cut extensions for individuals making more than $200,000 a year, and couples making more than $250,000, as it would increase the budget deficit by $700 billion.
Republican leaders are saying that tax cuts should be for all Americans, including wealthy ones, who are in a position to create jobs.
What the Republicans appear in effect to be saying here is let us give the money to the rich who will be responsible for filtering it down to the middle and poor classes. President Obama, on the other hand, is saying let us not heavily tax these lower classes that they through spending and investing can stimulate the economy.
Obama and the democrat's position on this matter seem to make more sense, because the rich tend to create more jobs, and invest more when the middle, and lower classes are spending more.
The Bush Tax Cuts
The Bush tax cuts, refer to the laws created during the Presidency of George W. Bush. These laws are The Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001, and The Jobs and Growth Tax Relief Reconciliation Act (JGTRRA) of 2003, which was signed into law on May 28, 2003. These laws were set to expire after 2010.
The Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001 made significant changes in several areas of the US Internal Revenue Code, including income tax rates, estate and gift tax exclusions, and qualified and retirement plan rules. In general, the act lowered tax rates and simplified retirement and qualified plan rules such as for Individual retirement accounts, 401(k) plans, 403(b), and pension plans.
Many of the tax reductions in EGTRRA were designed to be phased in over a period of up to 9 years. Many of these slow phase-ins were accelerated by the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA).
Why Were The Bush Tax Laws Created?
The laws were put in place to spur growth in the US economy, but it has been controversial as to whether it has in anyway achieve its goals. It is argued that the rich were the ones who profited most from these tax cuts and the economy suffered because less taxes were being paid to the treasury.
Some argue that the Bush Tax Cuts increases the pace of economic recovery and job creation, but with an economy which has fallen into recession and yet finds it difficult to recover, while thousands continue to lose their jobs, homes and families. How can it be confidently said that these cut will, or continue to spur growth in the economy?
The tax cuts have in effect placed the full burden of the economy on the backs of the middle and poor classes of the society, while those who can most afford to pay taxes escape unscathed.