I need help with this economics question please?

Question

One of the major economic policy initiatives which GW Bush has advocated-- and which John McCain enthusiastically endorses-- is a proposal to make permanent the “temporary” tax cuts that sharply reduced marginal tax rates on high income taxpayers and which were initiated in the economic slump during his first term in office. (These tax rate reductions were originally scheduled to fade out between 2009 and 2010)

A) What economic arguments/assumptions could be used to justify a policy of making his temporary tax cuts permanent?

B) What arguments/assumptions could be used to justify rolling back those tax cuts (returning tax rates to Clinton era levels with tax brackets adjusted upward to reflect inflation since then) at this time?

Answer 1

A. He could say that they would stimulate the economy.  As a matter of fact, on his site he says that raising taxes would stunt economic growth.  http://www.johnmccain.com/Informing/Issu...   He believes they will harm the economy.

B. The truth is, they won't.  Its a tax increase on the RICH, and the RICH only.  I don't mind keeping taxes low for others.  That's how it should be.  But the rich already have huge tax breaks.  They're benefiting a lot.  In fact, an article I saw said that they benefited the most (their income prospered).  Yet it doesn't help the economy.  The rich don't spend that much.  By well, if you proprtion their spending, they don't spend as much proportionately as the middle class and less wealthy people (low income).  In fact, they don't spend a large percentage of their income.  That's what tax cuts are supposed to do- get people to spend and help it get better (economy).  But the rich don't spend. That they don't. They keep the money..and save the tax cuts.

And they increase the deficit.  With less revenue, our deficit gets bigger.  We need to increase our revenue.  So I want a careful good way that would reduce spending and raise taxes on the rich- that's a Clinton idea that HELPS.