Friday, January 30, 2009

Tax Cuts for Democrats

Tax cuts are a stupid idea. And John Boner [sic] is an idiot for the reasons he suggests them. But for the sake of discussion, I was considering what kind of tax cuts I would want if I could only choose one. The two choices are:

1) Tax cuts for businesses
2) Tax cuts for individuals

With the current economic crisis, tax cuts for businesses seems like it would make some sense. The more money a business has, the more people they can hire. The problem is that no one is currently spending money. Will that change if more people are hired? Or will the businesses just keep the money for themselves to make up for money they have lost with the bad economy (meaning it neither gets spent nor promotes job growth)?

Individual tax cuts put money directly into the pocket of individuals. The idea will be that they will spend it, stimulate the economy and create jobs. The question here is whether or not they will spend it. I, for one, know that any money I get is going to pay some taxes I owe (self employment is a bitch). I know other people are just going to save the money or pay back their credit cards. Not exactly the boost the economy is looking for.

So each has their pluses and minuses. If I could only choose one, I'd probably choose tax cuts for businesses - and only small businesses, to prevent corporate hording. At least if businesses are making more of a profit again, there is a chance it will boost consumer confidence and spending will once again increase (which will generate jobs). I don't think either is a particularly good plan, but if tax cuts are necessary, small business tax cuts seem like the best option.

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