Tax Cut Facts

The blog editorial Tax Cut Facts: How Obama’s Tax Cuts Are Helping American Families is intended for the American public and was posted by Jared Bernstein who is Chief Economic Advisor to the Vice President. Bernstein is assuring the American public that the recent tax cuts are helping families. These tax cuts are helping kids go to school by paying tuition, covering health care and offsetting the cost of energy efficient home improvements.

Bernstein states that the Recovery Act provided billions of dollars to states to assist in avoiding Medicare cuts and provide an opportunity for teachers to keep their jobs. Although the Act provided money to each of the States, many of them still had to increase their State taxes to offset the funding provided by the Federal Government.  This increase made Americans feel like there were getting shorted since they saw the increase.  Also taking place, the Work Pay Tax Credit reduced the taxes withheld from taxpayers.  This reduction was withheld in small increments throughout the year and many Americans did not notice it since it wasn’t provided as a lump sum payment as had been done in previous years.

He also states that without the Federal Government programs and stimulus money the United States would have suffered a more severe blow to the economy then what happened during the recession.  This was shown in the graph from the Bureau of Economic Analysis. The real private income has dropped as the real personal disposable income steadily increased. According to Bernstein, this graph is proof that tax cuts are having a positive effect on the economy.

He also adds that there are other tax credits that are helping families and small businesses to build up the economy such as a 65 percent tax credit for people who lost their jobs by providing health care and making their first $2,400 in unemployment benefits tax free, child tax credits which reduced the earned income credit for low and moderate income families, and increased the earned income tax credit.

The facts that Jared Bernstein showcased in his blog do show a positive outlook on how the tax cuts are helping American Families.  It appears to be working as I have noticed that people seem to be ready to spend money, although I anticipate that they will be more cautious with their future purchases