Tax Implications Of Bailout And Elections

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Tax Consequences of Economic Failures

June 13, 2007 is the day that Richard C. Cook claims in his article, “It’s Official: The Crash of the U.S. Economy Has Begun.” In the past couple of years, months, and weeks, the United States economy and stock market showed significant failures and inefficiencies to the world. Perhaps the greatest evidence signaling the recent economic meltdown is the subprime mortgage problems that started a little over a year ago. The burst of the U.S. housing market bubble was caused by a combination of risky lending and borrowing practices and higher interest rates coupled with dropping housing prices, making refinancing more difficult. To deepen the drama, Wall Street’s excessive debt and unsustainable practices became more and more transparent. There was and still is tremendous turmoil amongst the Wall Street mammoths and the drama is certainly no longer entertaining or cheap.

The tax consequences from these economic failures are difficult to measure. However, Washington Post’s Steven Pearlstein estimates that “falling stock prices will cause companies to reduce their hiring and capital spending while governments will be forced to raise taxes… as revenue from capital gains taxes decline.” Furthermore, “the combination of reduced wealth and higher interest rates will finally cause consumers to pull back on their debt-financed consumption.” Congress and the Bush administration passed an economic stimulus package on February 13, 2008 and the U.S. Federal Reserve cut interest rates in hopes to address and mitigate liquidity and credit problems. The stimulus package includes tax rebates to low- and middle- income U.S. taxpayers of $300 per person and $300 per dependent child under the age of 1...

... middle of paper ... further research and evaluations are needed to decide on which candidate really has the better tax plan for the United States as a whole.

Works Cited

"Economic Stimulus Act of 2008." Wikipedia, The Free Encyclopedia. 13 Oct 2008, 00:09 UTC. 14 Oct 2008 .

"Emergency Economic Stabilization Act of 2008." Wikipedia, The Free Encyclopedia. 12 Oct 2008, 00:33 UTC. 12 Oct 2008 .

“Liberty Tax Examines the Emergency Economic Stabilization Act of 2008/$700 Billion Bailout.” Liberty Tax Service. 13 Oct 2008. 13 Oct 2008.

“Obama and McCain Tax Proposals.” A.E. Feldman Blog. . 21 Aug 2008. 14 Oct 2008.

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