Cutting taxes? Which plan is the best?

October 8, 2012

Cutting taxes? Which plan is the best?

Oct. 8, 2012   Jay Kaplan

Cutting taxes? Raising taxes? What is the best tax plan when it comes to helping the most people?

According to Jay Kaplan, an assistant professor of economy at CU-Boulder, the tax cut that benefits the most people is one that was passed last year.

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Cutting taxes? Which plan is the best?

Oct. 8, 2012                           Jay Kaplan

 

Cutting taxes? Raising taxes? What is the best tax plan when it comes to helping the most people?

According to Jay Kaplan, an assistant professor of economy at CU-Boulder, the tax cut that benefits the most people is one that was passed last year.

CUT 1 “I think Obama had a really good tax policy in 2011, and he extended it this year, which was a cut in the payroll tax rate. (:07) The benefit of cutting payroll taxes is just about every working American pays a payroll tax. We all pay that tax so the cut benefits all working Americans essentially - even the wealthiest to the poorest.” (:20)

What about cutting income taxes? Surprisingly cutting the income only benefits a few people, says Kaplan.

 

CUT 2 “Cutting the income tax rates is great but income tax is much more heavily weighted towards upper income, in that lower income wage earners, middle class wager earners, after deductions, don’t pay that much in income taxes especially in comparison to payroll taxes. (:17) 80 percent or so of working Americans pay more to the government in payroll taxes than they do in income taxes. So just by isolating the income tax you’re by definition basically giving a greater share of the tax break to the very wealthy.” (:31)

And as for cutting capital gains tax, Kaplan explains that only a few will reap the benefits of that cut.

 

CUT 3 “Cutting capital gains doesn’t really benefit you unless you’re making capital gains in the stock market. So unless you have capital gains to earn and you have substantial savings it does little for the typical middle class American who may have limited savings primarily in bank accounts. (:18) So cutting the capital gains tax rate is certainly a windfall for people who own shares, stock ownership – which favors the wealthy.” (:26)

Kaplan says one thing is for certain, if there is a tax cut then there also needs to be a cut in spending or else the deficit will only grow larger.

 

-CU-

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