Tax cuts

[starvingartist]

I got into a heavy debate about the significance of tax cuts. In my opinion, when government officials are pushing for them they are usually doing it for two reasons.

1. Re-election- no need to explain why.

2. Horrible economy- It is actually a bad sign in my opinion. Meaning that overall GDP is either decreasing or increasing at a decreasing rate (in account for inflation, etc). Also unemployment rates are going up, and there is little promotion, salary increases, bonuses in most job sectors. Therefore people are making less then they would be if the economy was growing. However to counteract inflation and the decreasing buying power of the average person, tax cuts are implemented.

Overall I rarely think tax cuts are a good sign, I actually think tax increases are. It usually means sales are increasing, salaries are increasing, etc.

Now I know not everyone agrees with me and my theories, but what are your thoughts. Am I completely off?

[vicman]

i dunno, i just want more of my money back from the feds. if they used their $$ somewhat properly we would pay less taxes.

[starvingartist]

Originally posted by vicman

i dunno, i just want more of my money back from the feds. if they used their $$ somewhat properly we would pay less taxes.

Ok, then I have a question for you. Woud you rather get a few thousand back? Or would you rather have regular salary increases? I just think it comes down to this concept. And government is trying compensate where the job sector is falling short on. For example a friend at Dow Jones told me how no one was getting a salary increase or bonus this year. Now this is more alarming even in the face of a possible tax cut. simply because the concept of the decreasing buying power of the dollar and rising prices.

[mr mahs]

2/3rds of GDP is made up of consumer spending the other 1/3rd is overnment spending and capitol investment..

By placing the money back into the consumers hand you increase revenue which in turn increases consumption by that consumer and inturn increases revenue and demand for companies products in the market place.. Companies higher employees to keep up with demand that will put more money into a employee/consumer hands to spend and for the govt to tax.. see the connections..

It's cyclical.. Reagen did it in the 80's which trippled tax revenue because tax cuts put people back to work.. To simply increase salaries would increase costs at companies but if there isn't sufficient demand because consumers don't have jobs to spend money they cannot give bonuses and salariy increases.. They are cutting income taxes not sales taxes so at the end of the 2 weeks the consumer has more to spend..

[starvingartist]

Originally posted by mr mahs

2/3rds of GDP is made up of consumer spending the other 1/3rd is overnment spending and capitol investment..

By placing the money back into the consumers hand you increase revenue which in turn increases consumption by that consumer and inturn increases revenue and demand for companies products in the market place.. Companies higher employees to keep up with demand that will put more money into a employee/consumer hands to spend and for the govt to tax.. see the connections..

It's cyclical.. Reagen did it in the 80's which trippled tax revenue because tax cuts put people back to work.. To simply increase salaries would increase costs at companies but if there isn't sufficient demand because consumers don't have jobs to spend money they cannot give bonuses and salariy increases.. They are cutting income taxes not sales taxes so at the end of the 2 weeks the consumer has more to spend..

Yes I see the connection that is precisely the point I was making. That tax cuts are made to offset the decreasing GDP because typically when they are made the economy is doing bad. Therefore to increase spending they give back the money. I was eluding to the fact that tax cuts are a bad sign. How a better sign is increasing GDP not because of tax cuts, but because salaries are increasing, and consumer spending is up. Therefore I do not understand when people embrace and are joyed by tax cuts, meanwhile it is really a call for action because there is in fact decreasing (or increasing at a decreasing rate) GDP which is usually a factor of Consumer spending decreasing because of economic trouble, also decreasing salaries, etc.