Tax Cut Argument Essay

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Heated debates over tax cut have always been one of the central economic themes on the American political table. Since taxes relate directly to the quality of lives, it is by no means surprising to find people showing significant concern about policies regarding cutting or raising the amount they have to pay. The idea that lowering tax rate makes room for growth has remained generally popular among the majority, taking a possible decrease in individuals’ tax burden and increase in productivity into account. There is, however, extensive research conducted on the topic that produced controversial results. Despite its appeal to instant benefits for one’s saving account and investment, reducing tax rate has yet to show a definite positive effect…show more content…
Whilst William McBride, chief economist for Tax Foundation website, sided with tax cut policy saying that to strengthen the financial state, “we should lower taxes on the earnings of capital,” “workers and the businesses that hire them,” Chye-ching Huang and Nathaniel Frentz, both are senior Tax Policy analysts, completely debunked the evidence McBride provided to support his argument, which includes the review of twenty-three among twenty-six studies he thought to advocate the idea. Indeed, as one conducts research, regardless of what sources it comes from, agreement over tax issue should never be found as a unanimous answer. One of the reasons why it is so difficult to reach a definite conclusion rests on the fact that although some statistics may show economic growth was in step with tax cut, correlation does not mean causation: just as ice-cream sale and murder rate increase during summer time, it is baseless to assume that higher ice-cream consumption leads to higher odds for crime. Moreover, because there is a great amount of research has been done on taxes, different interpretations from these data are understandable. Before concluding that “nearly every empirical study of taxes and economic growth published in a peer reviewed academic journal” finds cutting taxes improves the financial status quo, thus, people need to consider…show more content…
The first and obvious effect would be a deficit in national budget. Without enough money to operate and satisfy community’s needs, the government could be in serious trouble. For taxes cover numerous aspects that directly influence people’s lives, once it displayed signs of insufficiency, standard of living would subsequently go down. According to Center on Budget and Policy Priorities, most of the federal government’s funding goes into defense, social security, and major health problems, with a total of 55 percent for three categories and only 8 percent for benefits for federal retirees and veterans, as well as 3 percent for all other purposes. Allowing tax cuts thus means letting community services weaken in quality and putting the national security at risk. Additionally, budget deficit can also lead to reduction in investment, net exports, and international asset flows, as analyzed by Laurence Ball and N. Gregory Mankiw, research associates of the National Bureau of Economic Research, in their “What Do Budget Deficit Do?” article. What results from these abatements evidently affects the economy heavily, both by devaluing the nation’s currency and decreasing the overall GDP. Considering such possible consequences, hence, it is no longer valid to state that lowering taxes equals growing the economic
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