Many issues surrounding the tax relief plan, signed into law on June 7th of this year are very unclear and contradictory. It seems as though each person, depending on their own political affiliations, principles and suspicions of opposing parties, believes different things to be true about the purpose of the recent tax cut and the effect it will have on the current economy. This heated debate transcends these issues into other economic debates; the recent economic slowdown and specter of a longer recession as well as the governments ability to not only continue providing social security but also to salvage the program to fulfill its seemingly unending cycle of obligations to elderly beneficiaries. .
Not only are the perceptions of and reactions to this tax cut varied and inconsistent, but all those who have a certain opinion on the matter have also obscured the economic numbers that should reveal the truth. These discrepancies have also been compounded by the timely change in the method of determining surpluses in the government and these accounting shifts have left some holes in the supposed massive surplus that will accumulate over the next decade. The recent nature of the tax cut has also had an effect on the conflicting views, since all the sources are mere predictions and therefore cannot base their analyses on concrete information and experience. These differing economic forecasts will be identified and explained in order to make some sense out of the effects of the tax cut. However, the Bush tax relief plan must first be described and enumerated.
The Bush tax plan, although the motive behind it remains sketchy at best, reduces the amount of money every American has to pay to the federal government from their income. Although the tax cut seems broad and encompassing, federal income tax is only part of what every worker loses off his paycheck. But more on that later.