The reality is, higher income-tax rates discourage work and lower standards of living; they dishearten the entrepreneurs in our society who are trying to improve their own standards of living and the situations of their families. Bush understands this. Rather than rewarding the rich, his tax-rate cuts increase the reward for work.Our economy depends on people who are motivated to work. As the penalty for a solid work effort increases, workers will become less productive. This hurts employers and makes outsourcing more and more attractive. There are some who feel it is better for a U.S. company to close its doors rather than outsource a portion of their labor. In my opinion, that is a pretty snobbish attitude which damages our economy far beyond the outsourcing.
Entrepreneurs who form their own companies have to pay both payroll and income taxes. That's a big cost for newly formed companies as the taxes come right off the top (whether or not there is net income). If the Democrats have their way, the marginal tax rate on many tax-paying Americans could be back over 50 percent next year. Will this help the economy? Will such a tax increase create or destroy jobs? Does voting America really want to find out?Anyone who has been self-employed understands the weight of this tax burden. The small businesses are the backbone of this economy yet the payroll taxes make it extremely costly to add employees. If those burdens were relieved, these businesses would grow faster and create additional jobs. It would also increase their consumption of goods and services, which helps other businesses.
There are still many who feel that tax cuts do nothing to aid the economy. Some see it as an act which merely reduces the government coffers while putting money back in the hands of people, who (in their opinion) do not need it. I see the economy as completely interconnected. If my neighbor gets a raise, it does not make me mad or jealous. His gain does not cause me harm. It may very well help me in an indirect manner.
One brief example: A family in our church got a major promotion through a job change. With a portion of that money, their son takes piano lessons from the Queen (May She Live Forever). With that income, and that of other piano lessons, our boys attend a private school. With that money, that school is able to pay their teachers better. It is not important to me how those teachers spend their money. It helps someone else down the chain.
Our economy is completely interconnected with itself.
