June 12, 2024

Lately, discussion continues to be brewing regarding additional tax cuts that will benefit, typically, the wealthiest top 1%. Based on several news sources, the Trump administration is mulling over whether yet another $100 big tax cut, through indexing capital gains, might be applying without congressional approval. Though additional tax cuts might be wonderful for that affluent, the rise in the tax gap must be filled by something. Some fear the tax cuts means reduction(s) in other benefits (i.e. Social Security, Medicare, and State medicaid programs) continuing to move forward.

To place all of this into perspective consider how indexation works. For instance, should you purchased a stock for $200.00 dollars in 1980, now that stocks value is $600.00 dollars. Rather of having to pay taxes around the $400.00 dollar gain (congruent to current tax law), the acquisition cost could be adjusted for inflation to $420.00 dollars. Which means that taxes would simply be owed on $180.00 dollars. The concept would be to stimulate economic growth underneath the supply-side economic theory that posits job creation through investment by assisting the wealthy spend less.

Though supply-side economic theory is seem theoretically, there’s little historic data that supports positive economic outcomes from supply-side theory application(s). A minimum of not for that bottom 90% of people. Based on J.G. Gravelle (2018), a senior specialist in economic policy in the Congressional Research Service, “indexing capital gains wouldn’t incentivize new investment but instead incentivize savings. Capital gain effects will also be limited due to evidence that savings may not be attentive to alterations in rates of return.”

Tax savings will always be ideal for the rich, but also for another 90% percent of american citizens it appears they always spend the money for cost. Additionally, at any given time when record earnings are being as reported by multi-nationals and individuals of wealth, the concept the general public would support this type of tax cut appears dubious at the best. Also, it would be great to listen to of the tax cut throughout America. It appears that will do more to stimulate economic growth than provided greater investment (saving) chance for that wealthy.

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