The Herald Bulletin

Evening Update

Local Business

August 14, 2010

Big Joe Clark: Revisiting the Bush tax cuts

Watching politicians attempt to find a balance between taxation and government spending is a lot like watching a swarm of vultures all stalk the same prey: the prey usually ends up mauled beyond recognition, and no one is left satisfied.  Some politicians might say the country is headed for the same fate, unless the Bush tax cuts are either extended or left to expire in December.  Before we address this issue, let us take a step back and examine the circumstances that brought about these currently-controversial tax acts.  

In late 1999 and early 2000, George W. Bush (R) was running for office against stout competition in Al Gore (D) and Steve Forbes (R).  Part of the Bush campaign platform was based around letting the American public keep more of the money they earned.  At the time national debt was (relatively) low, and keeping with campaign promises the Bush Administration enacted a first round of cuts in 2001.  Though there were dissenters, the main sticking point of the arguments against the cuts were how and amongst whom the cuts were to be divided; it seemed little attention was paid to the impact of this legislation on the future debt-load of the country. The major discussion was focused on who was to be allowed the most tax breaks.  In 2003, the story repeated itself: politicians, concerned for their constituents (and indirectly themselves), spent more time debating who tax cuts should be applied to than IF they should be applied at all.  

Partly because of fiscal spending, the national deficit is now estimated at $1.2 trillion and total national debt at $14.1 trillion.  With the Bush Tax Cuts set to expire soon, today the debate swirls around whether they should be extended or allowed to end.  However things are different now, in the wake of significant economic downturn, than when the cuts were first proposed.  Some economists argue that extending the cuts is a way to keep people spending and avert another dip into recession; others say that our deficit cannot sustain the lost tax revenue, and the tax cuts must expire to help mend a broken budget.

An older idea that has been re-posed is that of a value-added tax, which could act as a blanket sales and spending tax and could potentially replace income and earnings taxes.  The thought is that a value-added tax might encourage people to work and save more by taxing them only based on what they purchase.  Some say that this hurts the lower class, which generally spends all of their income, but proponents argue that such a tax could be designed to avoid this pitfall.

Most important to take from all of this is an understanding that there are two directions we can attempt to pull and push the economy from: spending and taxes.  If we try to lead from both directions simultaneously, we may find ourselves without the energy to fly away.

Joseph “Big Joe” Clark is a Certified Financial Planner and the Managing Partner of the Financial Enhancement Group, LLC.

Text Only
Local Business
  • FEA - HB0729 - Senior Falls Aging safely in the comfort of her home Marilyn Moneyhun said being totally reliant on others is difficult. "Losing your independence is a shock to your system," Moneyhun, 84, said. "You are not in control anymore."

    July 29, 2014 1 Photo

  • NWS - HB0728 - business expansion CB Fabricating makes $2 million investment

    A local business founded in 2006 has invested $2 million in new equipment and a building expansion.

    July 29, 2014 1 Photo

  • Charo Boyd: 'My Social Security' simplifies your life So many people buzz through extremely busy and complicated schedules these days. A smartphone in one hand, a computer in front of you, and a digital task list that never seems to end. In addition, to complicate things just a little more, there’s another event you need to add to your list — National Simplify Your Life week.

    July 28, 2014

  • nws - hb0725 - colts - jc - 4.jpg Colts camp's impact: pricey or priceless?

    Football fever is here and the city is flooded with fans eager to catch a glimpse of a favorite player. But officials say they are unclear what kind of economic impact the Indianapolis Colts training camp has on the area.

    July 26, 2014 1 Photo

  • BIZ - HB0727 - Skill gap 2 Seeking a solution today, not tomorrow Tina Warner-Morton says she wants to open her own healthcare business because it is too difficult to work for an employer with unclear employee expectations.

    July 26, 2014 1 Photo

  • BIZ - HB0727 - Cathy Cupboard Biz Profile Business Profile: Cathy's Cupboard focuses on customer satisfaction Cathy McPhearson opened her first storefront in June, but this is not her first venture into business. “I have always wanted to have my own business,” she said. “The problem was finding what people like, but everyone seems to like candles.”

    July 26, 2014 1 Photo

  • IU Health Ball Memorial Hospital named Level III trauma center The Trauma Center at Indiana University Health Ball Memorial Hospital has been verified as a Level III Trauma Center by an ad hoc committee of the Committee on Trauma (COT) of the American College of Surgeons.

    July 26, 2014

  • Clark, Big Joe mug 'Big Joe' Clark: Beat the market or meet your goals? True or not, my experience tells me that goals – especially when written down – undoubtedly serve as catalysts for success. However, danger arises when a goal does not properly focus on the long term result you expect.

    July 25, 2014 1 Photo

  • DSC_8125.JPG Auction teaches in business, farming

    After 10 years of 4-H, saying goodbye to his animals has become a simple matter for McKennon Heald. But he said he wouldn't be surprised to see some tears from some of the younger participants. He's been there.

    July 25, 2014 2 Photos

  • Anderson, Alexandria and Elwood receive grants to tear down abandoned houses Three Madison County cities — Anderson, Alexandria and Elwood — received state grants that will be used to tear down abandoned, dilapidated houses.

    July 25, 2014

Hyperlocal Search
Premier Guide
Find a business

Walking Fingers
Maps, Menus, Store hours, Coupons, and more...
Premier Guide