Originally, President Bush had proposed a $726 billion tax package that he hoped would boost the U.S.’s economic growth. Many others disagreed with this idea and believed it would be inappropriate during a time of war. Now senators are discussing the possibility of a more reasonable $350 billion tax cut that would give the economy a boost without creating a deficit.
The President’s tax cuts pertain to married couples’, who get a larger tax deduction, and general consumer spending. Not only that, $20 billion will go to state governments, plus another $7 billion would go to unemployment benefits. However, “an analysis by the Brookings Institution and Urban Institute found 36% of all households would get no tax cut in 2003, and more than half would get a tax break of $100 or less.”
Businesses will receive benefits if the bill is passed. Entrepreneurs will get $100,000 toward new equipmen
The U.S. is still waiting for a decision from congress due to the frailty of the situation. With the money that went to fighting a war in Iraq, the government has already built up some financial deficit. If all goes well, unemployment will decrease as new jobs are created by businesses who can afford to hire employees, then production increases, and consumers can put more money into the market. But, the majority of the U.S. believes that a federal deficit is too much to gamble with and that the tax cut will only affect the rich anyway.
It is believed that this tax cut will increase budget deficits. ''The problem is that the revenue loss from tax cuts is pretty substantial; that's going to drive up interest rates and reduce national savings, so in the end it's a wash.'' says Guy Faucher at Economy.com. In other word if all goes well, the economy should return to its current state.
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