Macroeconomic Principles And Policy

revenue Cuts - No Magic Wand tax separatrixs , in theory , kick upstairs spending . Since World War II , this magic explicate , spending as ever popularized by Keynesian political prudence has become the magic wand for curing the woes of the market rescue However , these appraise cuts must be done plumb and still ensure progressive taxation , if we follow Keynes reasoningThe young tax cuts of the Bush administration have been quite skewed towards the wealthiest of society . If consumption is the key to jumpstart the economy , raw taxes for the rich will not help because they have a lower marginal propensity to consume than the lower-income groups . But this is precisely what has happened . For example , since 2003 the estate tax has been lowered gradually (Estate Tax Changes , 2002 with plans to abolish the estate tax completely , something that would only have-to doe with those who leave behind estates of 1 million or much . Even taxes from investment income are being lowered (Bush tax cuts , 2006 something that would not affect materially the millions of Americans who only have the gold to spend , not investThese tax cuts have boosted consumption of human body , but it wasn t the main driving force for the growth in the US economy . The other side of the economic insurance of the Bush administration is the huge budget deficit . As the US government spent money on everything to picture stimulus to the burst bubble of the post dot-com lucubrate , the 13 trillion economy soon gained momentum .

This plausibly accounted for more growth than the tax cuts ever didA better financial policy would be to encourage more progressive taxes , and cut more taxes for the economically worse-off . As their disposable incomes increase , the economy will see a lot healthier be for consumer spending as these people have very brusk taste for saving their new source of funds . This in turn , will prompt capitalists to invest more , since the song tell that the economy is booming - a self-fulfilling prophecy that is the centrepiece of any Keynesian solution to economic problemsR E F E R E N C EEstate Tax Changes (2002 . Retrieved February 5 , 2008 from Web sitehypertext transfer protocol /www .taxadmin .org /fta /rate /Estatetax .htmlTax cuts on enthronization : A Windfall for Rich (2006 . Retrieved February 5 , 2008 fromWeb site : http /money .cnn .com /2006 /04 /05 /news /tax_cuts /index .htmPAGEPAGE 3...If you want to get a full essay, order it on our website: Orderessay

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