Extend or Expire the Bush Tax Cuts?

With the last day of the Bush tax cuts coming closer, there is more talk about whether the government should extend them or not. The Bush tax cuts, which started in 2000, are supposed to expire on the last day of 2010. Tax cuts are the act of reducing taxation. Democrats don’t want to raise taxes for people with high incomes. However, there are still many democrats that have opposite opinions. Republicans want to extend all parts of the Bush tax cut. This means keeping tax cuts for the rich and the poor. On the other hand, the Obama administration wants to extend the tax cuts only for middle class. If the tax cuts were to be extended for everyone, it would cost the government 680 million dollars in revenue over the next ten years. Keeping the tax cuts for the middle class is expensive enough already.

In the graph above, which is a Laffer curve, it is shown that the tax rate decreases, just like it would if there was a tax cut. As mentioned before, if the government extended the tax cuts for everyone, the tax revenue would go up to 680 million dollars. As shown in the graph, as the tax rate goes down, the tax revenue goes up.

Here are some articles related to the debate over the Bush tax cuts:

http://www.aolnews.com/surge-desk/article/democrats-and-republicans-play-chicken-over-bush-tax-cuts/19570208

http://www.cbsnews.com/8301-503544_162-20011515-503544.html

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