A new study released on Monday by the National Association of Business Economists revealed most U.S. economists are in favor of extending the Bush-era tax cuts to avoid further weakening the already fragile economy. However, economists were not in agreement on which route the Federal Reserve should take, if not going back to Clinton tax rates that were adjusted for inflation.
Bush Tax Cuts as of Today
It’s no secret that Bush-era tax cuts are near expiration. Officially ending on Jan. 1, these cuts currently include breaks on income (25 percent), dividends and capital gains (5 percent), and the biggie, estate taxes, which could leap as much as 55 percent next year if not saved.
Because the cuts are so substantial, lawmakers have been in a bit of a frenzy trying to figure out whether to extend them or let them expire. However, despite the fact that Obama is in favor of extending tax cuts for only the middle class and letting them expire for the wealthy, 60 percent of economists surveyed believe that everyone should have access to the cuts a little while longer.
What Do You Think?
Extending the Bush-era tax cuts or letting them expire could have a direct effect on you as a worker. While only 5 percent of the population would pay taxes in the highest tax bracket (which would reach as high as 39.6 percent), the average American pays income taxes that fall into the 15 to 25 percent bracket and this could increase to as high as 28 percent if the cuts are allowed to expire.
This means, if you currently earn $40,000 a year, you could end up owing $400 more in taxes for the year. When you’re trying to make ends meet, losing this amount in a refund, or having to pay this much more out of pocket, could result in a significant loss of money that could have been put away in your bank accounts.
The Bush tax cuts are definitely a hot topic and for good reason. Without taxes to fuel the government, many important programs and services suffer, but if the taxes increase too much, families won’t have enough to survive, let alone fuel the economy.
With so much controversy surrounding the tax cuts, how do you think they should be handled?