Business
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As an economist it is imperative that you adopt a “long term” outlook on American economy. Many times, we have a tendency to formulate a short term solution for a long term issue and then wonder why the problem is reoccurring. Tax cuts are a fantastic example of this principle.
In my opinion, the recent tax cuts have been used as a band-aid to disguise long term economic issues in the following manners:
Lowering taxes only fixes the spending power of the American public by freeing up immediate cash resources. The problem is that more money creates more debt that is uncollected and that we as Americans end up paying for in the long run.
Lowering taxes decreases the amount of revenue generated by our government and produces a lack of increased job and market stimulation and an increase in unemployment and overall national debt.
Lowering taxes has a tendency to provide the most relief and benefit for the wealthy, the largest contributor to the “tax pool” and most capable of paying taxes.
More effective changes the government should have employed are stimulating job and business expansion by creating jobs, funding American-made business and creating more opportunities for businesses to be owned, operated and maintained by American businesses. Also, allow the Federal Reserve to invest in American business by opening up reserve opportunities to include the purchase and investment in stocks and bonds on the NYSE.
Also, re-direct efforts to put more money in the American publics pocket by lowering interest rates on housing, residential and business loans to encourage business growth and expansion which in turn creates new jobs which cant be bad for the economy.
Economics: Principles and tool/ Arthur OSullivan, Steven M. Sheffrin. 4th ed. (2005)