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Economists Recommend Extending Bush Tax Cuts

CNN Money surveyed [3] 31 economists for their economic forecasts and asked what they would recommend Congress doing about the expiration of the Bush tax cuts. From a list, eighteen of the thirty-one chose to extend the tax cuts for everyone, not just those outside the two top tax brackets [4]. Three of the thirty-one supported President Obama’s proposal and nearly all of them opposed doing nothing and letting the cuts expire.

For those not entirely familiar with the backstory on this, President Bush signed into law back in 2001 and 2003 a series of tax cuts now known as the Bush tax cuts. It lowered tax brackets, capital gains taxes, and are set to expire at the end of this year. With the sunset provisions set to take place in a few months, there has been much debate on what should be done. President Obama’s proposal would extend the tax cuts for all but the two top tiers, individuals making more than $200,000 and families making more than $250,000. If Congress were to do nothing, tax rates would increase back to pre-Bush tax cut levels.

I personally believe that we have to do something, as increased taxes will certainly not help the economy (I’m armed with a bachelor’s degree in economics, but don’t tell anyone!), and it needs all the help it can get. I can see the argument for President Obama’s plan of letting it rise for the top two tiers but I believe those two tiers represent a lot of potential investment capital. That’s capital investment we need to spur on new businesses and letting the government “stimulate” the economy isn’t working as effectively as it needs to be. Think of it this way, you make better investment decisions if you’re investing your own money, rather than a strangers. When the government taxes its citizens, it’s spending a stranger’s money.

Before you come up with an opinion, this Washington Post articles tackles five myths [5] about the Bush tax cuts.

What do you think they should do?