The irony behind the battle on Capitol Hill regarding expiring tax cuts is that it is going to hurt the economy in the eventually as lawmakers will have to find a way to stimulate the economy to make up for the amount of money that will be taken from paychecks in January.
If the tax cuts expire, then everyone will have less in their paychecks come January. If we have less then we spend less. We spend less the business owners have less to reinvest into expansion. Reduced expansion means fewer jobs and less jobs means less disposable income.
It is a brutal cycle and one that that we won’t be able to get away from as long as we are in this particular type of economic system.
According to the Washington Post, “Without a deal, most American workers would receive less money in their first paycheck of 2012, with a typical earner getting about $20 less per week. Also, jobless benefits would be cut off for about 3.5 million people who have been unemployed for long periods—up to 99 weeks.”
So, if the payroll tax cuts are allowed to expire and the unemployment continues to rise, then what is the next logical choice for lawmakers to make next?
You got it! A stimulus package!
You should since the sarcasm in this post, because after Congress announced a fewweeks ago that tomato paste was an official vegetable, I have lost all faith in our lawmakers.
What solutions do you have to this vicious cycle that our economy is experiencing?
Could a flat tax fix this situation? What about potential sales tax?
We would love to hear your views! In the meantime, instead of watching the ball drop on New Year’s Eve how about tuning into watch a bunch of clowns, I mean lawmakers, battle it out while keeping their political careers at top of mind!
By the way, it is the end of the year, which means it will soon be tax time. We are busy preparing our staff to meet your needs. Don’t miss out on possible tax savings and stop in and sit with one of our professionals.
Disclaimer: Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.