Tax cuts for the wealthy were introduced in 2001 and 2003 during the George W. Bush era. Although Republicans were hopeful these tax cuts would become a permanent part of American law, they were set to expire in 2010. When Republicans lost control of Congress in 2006, the future of tax cuts looked uncertain.
However, to appease Republicans, President Obabma extended the tax cuts until the end of 2012. His plan also included a commitment to draw out benefits for the long-term unemployed, cut payroll taxes for a year for all employees, lower the estate tax as well as to offer s decrease on dividend and capital gains tax. These steps were all a part of his plan to stimulate the economy.
As the end of 2012 approaches, the debate between Democrats and Republicans over taxes has increased. The fact that it is also an election year has added fuel to the fire. Recently, President Obama has been focusing on reducing America’s deficit. To do so, he’s called for the end of the Bush era tax cuts on income over $250,000 and a limit on the value of deductions taken by those with higher income.
Currently, Democrats support the end of tax cuts for those who earn more than $1 million but want tax cuts to continue for the middle class. Their plan is to use the tax money from the upper class to pay down the deficit. The stance Republicans are taking is to support small business growth and their owners. They fear ending tax cuts will hurt economic growth. Small business owners would be negatively affected and they are a the core of a vital economy.