Question

Should the US extend the tax cuts beyond 2025, or should the US repeal the tax cuts immediately? Why or why not?

Answer 1

The tax cuts are temporary and these cuts are valid up to 2025. President Trump has taken such steps to drive up economic growth and reduce the unemployment figures.

Based on the present economic conditions, these tax cuts are proving beneficial. The covid-19 has caused a decline in the aggregate demand in the economy and tax cuts are acting as the cushion against the crisis.

But in the post-2025, the government must reduce the concession to the corporates as the corporates are becoming big beneficiaries of such large tax cuts. The individuals are not being benefitted overwhelmingly. Thus, the individual tax cut can be extended as the income and wealth inequalities are rising rapidly while the corporate taxes must be raised to make the society more egalitarian. Furthermore, government debt is likely to rise by $ 2 trillion over the next decade owing to such huge tax cuts. The government must take into account the potential pitfalls of rising deficit and debt.