Bush Tax cuts.... Hmmmm

I was raised on a steady diet of Reaganonomics and I am a big fan of low taxes and limited government.  So when I heard that Washington was considering ending the Bush tax cuts I thought... NOOOOOOOOOOOO DOOOOOOOOOOOON'T DOOOOOOOOOOOO IT!!!!!!!!!!!! But I have since looked at the subject more closely and have revised my position.

Let me start off by saying that I am glad I am not in congress for the purpose of this issue because I am still on the fence about this issue.  Before you freak out, let me share with you why.

I think it is a demonstrable fact that businesses love low taxes and chafe under high taxes.  So, low taxes are good! YAY FULL SPEED AHEAD!!!!!  Wait not so fast.  Fiscal conservatives also love to talk about a curve wherein the government lowers taxes and as a result business improves to the point where the government actually makes more money with lower taxes than they would with higher taxes.  This is great in theory and in practice works too... when the economy is good.  However, when the economy is bad and business is slow anyway, that curve ceases to be effective. So in a slow economic climate as long as the government is fine with lower incomes, then low taxes are good.  But here is when the trouble comes in...

Our government has spent money in the last year at unprecedented levels.  Health care, stimulus package, social security, all of these have caused our debt and deficit to rise exponentially.  Which raises a conundrum,  either continue racking up debt or pay for your legislation.  In order to pay for it you need to cut budgets and programs or raise taxes.  As already established, we are implementing more legislation so cutting programs is out.  So that leaves us with raising taxes.

So we have come full circle.  In order to pay for our programs we must raise taxes.  But if we raise taxes it hurts business.  So, should the Bush tax cuts be continued or repealed?  I really don't know.  Both sides are right.  repealing the Bush tax cuts will hurt business.  So is it worth hurting business to pay for our programs? if not, will we continue down a road that leads to situations like Greece and Ireland.

There are no easy options.  But this is the mess we have made for ourselves.

~The Extemp Guy