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...
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...ve 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 .
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Just as the great depression, a booming economy had been experienced before the global financial crisis. The economy was growing at a faster rtae bwteen 2001 and 2007 than in any other period in the last 30 years (wade 2008 p23). An vast amount of subprime mortgages were the backbone to the financial collapse, among several other underlying issues. As with the great depression, there would be a number of factors that caused such a devastating economic
Immediately after being sworn into office, Reagan implemented the first of many tax cuts. The Economic Recovery Tax Act passed in 1981 took 20% off taxes from top income levels and 25% off taxes from all lower income levels. Additional tax cuts, enforced in 1986, lowered taxes for those with high incomes by another 28% and those with lower incomes by 15%. These cuts were enacted based on the principle that tax breaks for the upper echelon of society would encourage investment and spending, creating new jobs for lower income individuals. Though these acts helped America during an economic low, they had consequences which are still being felt today. During Reagan’s presidency the distribution of wealth shifted unfairly towards individuals...
Teslik, Lee. "Backgrounder: The U.S. Economic Stimulus Plan." The New York Times, January 27, 2009.
Another $102 billion would be used to help victims of the recession with unemployment insurance, health care, food stamps and job training, while jobless aid would also be increased by an extra $25 a week. As we can see, the evidence is clear and growing by the day, the Recovery Act is working to soften the greatest economic downfall since the Great Depression and is laying down a new foundation for economic growth.... ... middle of paper ... ...
...vailable for stimulus programs to boost the economy out of the 2008 financial crisis. This caused fewer jobs to be created, which meant less tax revenue and more debt.
Gallagher, Bill. "Bush Tax Policy Favors Robber Barons." Niagara Falls Reporter 3 Jun. 2003. Niagara Falls Reporter Archive. Niagara Falls Reporter. Mesa Verde High School. Citrus Heights. 30 Sept. 2004 .
The War on Terror reduced funds for stimulus programs to boost the country out of the 2008 financial crisis. Fewer careers were created, which meant less tax revenue, further increasing the
The US gave almost $ 150 billion of refunds to tax payers in February this year hoping to revive the economy and for all that what Bush Junior got were a couple of months where sales of Wal-Mart picked up. After that? You guessed it right! More freebies! The $ 200 Billion of Fannie and Freddie Mac guarantees, the $ 75 Billion AIG loan and still no change! The recent $280 Billion that was just given a few weeks back, where has that gone? The big banks have swallowed all of it in their coffers to prop up balance sheets but this has not reached the real economy, so why would $700 Billion dollars which is just the total of the all the above figures stand to be any different? You don’t give checks to people who are going to use this money to stock it up in their lockers to feel good about themselves and especially not to those who articulated the entire epic so far which is turning o...
Hoffman, Kathy Barks. "Rick Snyder presents $45 billion budget; cuts to education, personal tax exemptions." Oakland Press, February 17, 2011: 1-3.
"Highlights of the Libertarian Party's 'Ending the Welfare State' Proposal." Libertarian Party: The Party of Principle. 1994-2001. 8 Dec. 2002. <http://www.lp.org/issues/welfare.html>
The American Recovery and Reinvestment Act was signed into law by President Obama on February 21, 2009. The law had three major goals which were all aimed at stimulating a sluggish US economy. The first goal was to create new jobs and save existing ones by tax credits for hiring new employees. The second goal was to spur economic activity and investment in long term growth by increasing the amount of business asset that could be acquired by companies while allowing for immediate deductions for the cost of the assets as well as numerous tax credits for individuals and businesses. The third goal was to foster unprecedented levels of accountability and transparency in government spending by requiring recipients of recovery act funds to post acknowledgements on the Recovery.gov website.
Nunes, Glen. "Flat Tax vs Progressive Tax - Pros and Cons for the US." HubPages. HubPages, 4
...avoiding even deeper collapse of the global GDP and of employment. The government also created the Troubled Asset Relief Program (TARP), for the establishment and administration of the treasury fund, in an effort to control the ongoing crisis.
Whitehouse, Office of Management and Budget (OMB), 1 Jan. 2009. Web. 13 Apr. 2014. .
The "subprime crises" was one of the most significant financial events since the Great Depression and definitely left a mark upon the country as we remain upon a steady path towards recovering fully. The financial crisis of 2008, became a defining moment within the infrastructure of the US financial system and its need for restructuring. One of the main moments that alerted the global economy of our declining state was the bankruptcy of Lehman Brothers on Sunday, September 14, 2008 and after this the economy began spreading as companies and individuals were struggling to find a way around this crisis. (Murphy, 2008) The US banking sector was first hit with a crisis amongst liquidity and declining world stock markets as well. The subprime mortgage crisis was characterized by a decrease within the housing market due to excessive individuals and corporate debt along with risky lending and borrowing practices. Over time, the market apparently began displaying more weaknesses as the global financial system was being affected. With this being said, this brings into question about who is actually to assume blame for this financial fiasco. It is extremely hard to just assign blame to one individual party as there were many different factors at work here. This paper will analyze how the stakeholders created a financial disaster and did nothing to prevent it as the credit rating agencies created an amount of turmoil due to their unethical decisions and costly mistakes.