The Act 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.
American Life: 36% of Income Now only 33%! Limited Time Offer!
President Bush Jr. put American life on sale, just like merchants put their goods on sale. And he did it just like those sites do, with the implication that the sale will eventually end. The Bush Tax Cuts are set to expire at the end of this year unless Congress acts to extend them.
The political genius of the Republicans in 2001 is two-fold. On the one hand, it was easier to pass them by saying at the time that it was only temporary. There was a budget surplus (thanks to President Clinton). Then, 10 years later, they are able to frame the discussion in terms raising taxes, rather than letting the “sale” expire like was agreed to in 2001. So if the Democrats do not use the lame-duck session to extend the cuts, they can be blamed for raising taxes, during a recession no less! “How can you raise taxes during a recession?” the republicans will say.
And maybe these tax cuts would be sustainable if Bush hadn’t started two wars; the department of defense is our country’s biggest expense (both in terms of money and human life).
I think this is a black and white issue. America has been on sale for ten years. I’ve saved a few bucks, most of which I spent on toys. I’m also getting to roll over my traditional IRA into a Roth IRA, paying a bunch of tax now to save myself much more tax when I turn 60 (Covestor is about to publish a document about this particular issue which I will link to here in the next few days). The “rich” — for this argument, lets define that as married couples earning more than $370k — saved a shit-load, most of which they saved rather than spent.
But now we are in the greatest recession of our lifetime and our country operates at huge deficits. The US Government is basically a non-profit corporation; it doesn’t require profit, but it can’t operate at a loss. It borrows money to make up the difference which we can all agree is a bad thing. So, the prices need to be raised. It’s just that simple.
The idea that tax cuts create jobs is just untrue. It’s republican propaganda. The Republican party (a.k.a. the Tea Party), are funded by the rich, and so republican legislators need to do what they can to protect those $370k+ earners which fund their party. Because when you make a $10mm/year, 3% is $300k. If you make $100mm/year, 3% is $3mm. That’s some fuck-you money right there.
So what the republicans are going to do is say “fuck you” to the middle class and hold tax cuts for those citizens hostage, only to allow them if the rich get theirs. The republicans will argue that its not a tax cut to extend a pre-existing tax cut. But when a business ends their sale and returns prices to the regular level, this isn’t raising prices, it’s just ending the sale.