Bushs Tax Reform Essay Research Paper President

Bushs Tax Reform Essay, Research Paper

President George W. Bush s

Tax Relief Plan, how much of a gamble is it?

Some of the dynamics of Pres. Bush s tax relief are as follows: Replacing the current tax rates with a simplified rate structure; Doubling the child tax credit to one thousand dollars per child and applying the credit to the Alternative Minimum Tax (AMT); Reducing the marriage penalty by reinstating the ten percent deduction for two-earner couples; Eliminating the death tax; Expanding the charitable deduction to non-itemizers; Also making the Research and Experimentation (R&D) Tax credit permanent. President Bush comments on his proposal My tax plan is not just about productivity, it is about people A tax plan must apply market principles to the public interest to make life better for the average men, women and children. (See Graph 1a, for details)

An interest group in favor of the president s plan is Americans for Tax Reform (ATR), their mission statement states The government s power to control one s life derives from its power to tax. We believe that power should be minimized. ATR has lobbied and gained the support of

two hundred U.S. Representatives and forty-one U.S. Senators, by signing ATR s pledge. All of the Republican candidates for President have signed a pledge to this as well. ATR has not been able to gain any support from any Democratic candidates for presidents.

Interest groups against the lift of the death tax argue, that despite framing the estate tax as an abusive measure targeted at small business owners and family farms, and proponents of terminating the estate tax are attempting to shelter the assets of extremely wealthy constituents. Not only does it more evenly distribute aggregated wealth through taxation means, tax incentives included in the current estate tax model encourage increased giving to charitable organizations. Considering federal budget surplus projections are far from certain. It would be fiscally irresponsible to eliminate the estate tax that is integral to federal revenues. Facts that support their argument include that averaging around $17.2 billion annually, the estate tax accounts for 1.2 percent of federal tax revenue. In 1997, 98 percent of estates were not required to pay an estate tax. In 1997, 42,901 estates

paid estate taxes. According to the Brookings Institution, $7.5 billion in charitable contributions were made by

estates worth $20 million in 1997 (Brookings, The Washington Post, IRS).

Under President Bush s tax relief plan, an average family of four with one income will keep at least one thousand six hundred dollars of their earned income. Pres. Bush is a believer in the trickle down theory. Which means putting more money in the hands of the people (customers) and they in turn will buy more. When customers buy more merchandise, businesses must increase their supply the meet the demand. As the Gross Domestic Product (GDP) rises, new jobs will be created and the economy will flourish as a result of the people spending their own money. The trickle down theory will work only if the people spend their money, but if the economy is at a time of reseeding from its present status. The people will be more inclined to save their money and not spend it. This will hurt the economy greatly and could send it quickly into a recession.

As the present economy shows evidence of slowing down the trickle down theory could very well back fire on

Pres. Bush s Tax Relief Plan. I feel that the people of this nation deserve the right to choose how the government acquires its revenue from the people. By that I mean only

when a customer purchases something, not only is the federal government receiving this source of revenue. Instead it s split between the state and local governments. This would keep the balance of superiority more equal. This country is based on the idea of liberty, and the pursuit of happiness, by putting the power at the hands of the people make this idea possible (See Graph 1b, for visual). If the government is restricting, penalizing, and financially controlling the possibilities of American s this idea is lost.

Graph: 1a (source: Executive Summary from the Presidents Tax Relief Plan www.bushtaxreliefplan.com )

Tax Rates by 2001 Taxable Income*

Current Code Bush Plan**

Single Single

$0 $27,050 15% $0 $6,000 10%

$27,050 $65,550 28% $6,000 $27,050 15%

$65,550 $136,750 31% $27,050 $136,750 25%

$136,750 $297,350 36% $136,750 — 33%

$297,350 — 39.6%

Head of Household Head of Household

$0 $36,250 15% $0 $10,000 10%

$36,250 $93,650 28% $10,000 $36,250 15%

$93,650 $151,650 31% $36,250 $151,650 25%

$151,650 $297,350 36% $151,650 — 33%

$297,350 — 39.6%

Married- Joint Filing Married- Joint Filing

$0 $45,200 15% $0 $12,000 10%

$45,200 $109,250 28% $12,000 $45,200 15%

$109,250 $166,500 31% $45,200 $166,500 25%

$166,500 $297,350 36% $166,500 — 33%

$297,350 — 39.6%

* Taxable income is income less deductions and personal exemptions.**Rate schedule assumes tax plan is fully phased in.

Graph: 1b (source: Executive Summary from the Presidents Tax Relief Plan www.bushtaxreliefplan.com )

*……GO TO WEBSITE TO GET THE RED AND BLUE BAR CHART……

www.bushtaxreliefplan.com )