Question

Why is it not a good idea for the macro economy to cut taxes on working Americans?

Answer 1

Answer : Taxation plays a vital role in macro economics. Macro economy shows the whole economic structure and growth is the main object of every economy. Economic growth mainly depends on the government expenditures and government expenditure mainly depends on government revenue whereas government revenue mainly comes from taxation. Hence tax cut reduce the government revenue as a result government expenditures decrease. Government spend revenues on social security, social programs, infrastructures , bridge, road construction, parks, public servants, public health service centres, defence etc. This means the whole economic growth totally depends on government expenditures. If tax is cutted then wealthy people takes more benefit than the poor people because cutted tax increase the nominal income for all but real income decrease to poor people which may be the main obstacle for economic growth.

Therefore, from the above discussion it is clear to us that tax cut on working Americans not only for America for every country is not a good .