Taxes Promote Economic Growth

A countries’ economy that increases its productivity, or total output of goods, would be considered a healthy economy. The increase in productivity equates to a demand for those countries goods. When a countries demand for their goods fall, their productivity will decrease this is referred to as a recession. The Gross Domestic Product (GDP) is the most common measure for total output of an economy. Other key factor such as the unemployment and inflation rate extends the overall view of the economy.
Our country have experience some key tax cuts, the first one in the 20’s followed by the 60’s, Reagan’s tax cuts of the 1980’s and now in 2001, that all have some impressive numbers and data. The 1920 tax cut was the first federal experiment with supply-sided income tax cuts. Economists argue that it takes between 2-6 years for tax cuts to affect the economy. Data in the 1920’s indicate a decrease in federal revenues; however, revenues grew stronger in subsequent years during the economic expansion. The results of the Kennedy-Johnson tax cuts of the mid-sixties displayed similar results.
Ronald Reagan achieved the greatest success during his tax cuts in 1981, which was not approved by congress until October 1981. Reagan inherited a 13% inflation rate, 7% unemployment rate that peaked at nearly 10% and a negative GDP. As in the 1920’s, there was a period of time elapse before the tax cuts proved to be successful. The unemployment rate dropped to 5.5%; inflation subdued to 4% by the time he left office and the GDP leveled at a low 4% average growth rate with the best year being 7% growth in GDP.
President Bush’s tax cuts of 2001 sparked heated arguments in the Senate but was eventually approved and has been endangered of elapsing. In 2001 our economy suffered a major blow from the terrorist attacks, however, the tax cuts in 2001 has affected job growth and our economy. Since August 2003, more than 8.2 million jobs have been created for the past 46 months with an unemployment rate of 4.5%. The GDP since 2002 has been experiencing over 3% growth rate coupled with 5% interest rates.
The data does not lie, in the long-run; tax cuts benefit a capital society by allowing investors to invest in businesses that allow companies to expand their operations by hiring additional employees. A larger work force provides the federal government with an increase in revenues from taxes and social security pay outs. History from a Democratic and Republican President has taught us that tax cuts spur economic growth by placing more money in the hands of the people then a bureaucratic government.

Why Offically Raising Minimum Wage is Bad for Businesses

The minimum wage issue has recently been debated in the Senate and after some debating and amendments, the minimum wage will increase to $5.85 per hour, effective July 24th 2007,$6.55 per hour, effective July 24th 2008 and $7.25 per hour, effective July 24th 2009. Since the minimum wage law was passed in 1996, there have been nine attempts to raise the law and nine attempts failed. To the low income worker a sigh of relief can be heard. The increase in pay allows the lower skilled workers to a greater disposal income to spend on essential items or save for the future. Society benefits from greater revenue in sales tax from the increase in spending. This would help fund need programs in the community. These are a few of the assumptions that democrats and anyone who is pro an increase in minimum wage wants everyone to believe. This is so far from the truth that it is appalling. John Edwards is so animate that he introduced an amendment to assist with the passage of the bill. He declares the lower class workers need it; they really need this to happen. John Edwards must have failed Economics 101 and slept right through a finance class, since this is not what the lower class impoverish workers need for their salvation. Basically, democrats are saying more money will save you from your money worries and here are a few nickels and dimes to appease you. Economics teaches us about the law of supply and demand. A business that employees worker at the new wage of $7.25 are forced to raise prices beyond their normal rates. Good old inflation allows business owners to raise their prices at least 3% a year, which is the average inflation rate in the US. Employee’s wages is calculated as a variable cost from accounting, and variable cost can be reduced when its price is excessive. The variable cost is figured in the price of the product or service of the company. Employers either have to raise the price of their product to maintain their profitability or lay off employees to stay competitive with other firms. A business’s value chain analysis will appear extremely expensive at any point where workers handle their product from harvesting their raw materials to serving the final product to the consumer. Any company that desires to maintain profitable analysis’s their value chain to determine the cost drives and implement ways to reducing their overall cost. The increase employees wages, which is a variable cost, has increased dramatically over a period of time, these costs are the first to be reduced by lay offs. Not only lay offs, but reducing the total workforce for their lower paid workers. Have you ever waited in long lines at a fast food restaurant or waited to be seated at a sit down restaurant? Now imagine fewer workers due to costs and more of your valuable time wasted for the same service. Raising minimum wage is not the solution to the low income workers; this is a political smoke screen by the democrats to pay off this sector of voters. Education increases individual’s value to employees, not legislative from Congress. President Bush has increase education spending from the very beginning of his administration. The increase of money is a short-term solution, increase your overall value is the long-term answer.