Kerry’s Tax Plan Does Not Bode Well for Economic Growth
There are a few distinct differences between Senator John Kerry and President George Bush’s tax proposals. The economic and fiscal effects of those proposals will also be different. In the wake of a recession caused by the tech-bust of the late 90’s and the negative effects of September 11th, President Bush pushed the largest tax cut in United States history through congress. The recession turned out to be the shortest lived in American history. In the last thirteen months, 1.5 million new jobs have been created, home ownership is at an all time high, and the unemployment rate is lower than that of the average rate of the 90’s. President Bush’s current plan is to make these tax cuts permanent in an effort to maintain the economy’s steady rise. Both plans include marriage penalty relief and doubled child tax credit. The major difference is that part of Senator Kerry’s tax plan is to roll back the tax cut on the wealthiest Americans to increase government revenue and thus decrease the deficit. Raising taxes on wealthy Americans, however, would in fact have a very negative long-term effect on our economy.
Long-term, economists universally agree that the m
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Under Senator Kerry’s fiscal plans, however, the Heritage Foundation study concluded that the deficit would increase by 500 billion to 900 billion dollars if those plans were implemented. The data showed that the wealthiest Americans in fact pay more of the tax burden now than they did before the Bush tax cut. A vast majority of those small businesses are owned by the wealthiest Americans (over $200,000 annual income). Although the plan increases the $11 trillion annual GDP by an average of $7 billion during the period before 2011 and interest rates and inflation also remain unchanged, the Bush plan would increase gross domestic product several fold over the Kerry plan. And they do so even as their incomes have declined. Approximately 60% of jobs in this country are created by small businesses. The broad differences in these projected numbers can be attributed to the higher marginal tax rates in the Kerry program, which will raise the cost of earning additional income and engaging in new business activities. The aggregate income of the top one percent was down 26 percent between 2000 and 2002. Kerry wants to redistribute the nation’s wealth but largely keep the federal pie the same size. This is curious considering Kerry’s promises to cut the deficit in half but at the same time not raise taxes on the middle class. In an independent study conducted by the Heritage Foundation in September 2004 comparing the two candidates’ tax plans, the Bush tax plan is projected to yield over three times more jobs than the Kerry plan between 2005 and 2014. Compounding any concern about deficits is the Kerry plan’s effect on estimated GDP growth. ost effective way to bolster the economy and at the same time increase government revenue is to keep unemployment down and increase disposable household income. So if Kerry wants to minimize the effects of deficit federal spending on future generations, shouldn’t he develop a plan that ensures more rapid economic growth?
In summary, the most obvious difference between Senator Kerry’s and President Bush’s tax proposals is their solution to providing more tax dollars for the federal coffers.
Approximate Word count =
860
Approximate Pages =
3 (250 words per page double spaced)
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