The economy has undergone much change in the last several weeks with new tax cuts and spending bills. But what does it mean for the economy?
Economists believe that the tax cuts will create a great economic boom in the year 2018. They state that the economy will be stronger than ever before as wages will be raised and unemployment will remain at all-time lows. However, the unemployment rate is currently at 4.1%, which is extremely low. So, with the new tax cuts, where will the money, soon to be flowing into the economy, go? Wages will be raised which is a great short-term effect. However, the 'medium-term' effect may be rapid inflation. Although inflation is always lurking, tax cuts may accelerate the process as wages will be raised, meaning prices of consumer goods will also increase. The long-term effect will most likely be an accelerated increase of national debt.
With these tax cuts comes a bright future for 2018 as people will earn higher wages and jobs will continue to flow back into the US. However, a tradeoff being that inflation and debt loom over the US at a faster rate than previously projected.
At first, I though these tax cuts would be great for society as people would receive raises, however after reading this article, I now believe that they were a bit unnecessary. I understand that the tax cuts may do good now, but the opportunity cost being acceleration of inflation and national debt, make me think the year of raised wages is not worth it.
Do you think the tax cuts were a good idea?
How else could they have gone about these tax cuts?
2 comments:
The negatives of these tax cuts outweigh the positives in my opinion. While they could be argued to help stimulate the economy, the economy has been thriving recently. I believe it makes more sense for the government to keep taxes the same and save more for the time that the economy isn't doing well. It is inevitable that eventually there will be another case of economic hardship, and the government should keep high taxes for that moment, rather than increasing the deficit and depleting any chance for savings.
I also believe that the tax cuts weren’t necessary at the current time. The inflation rate of the US is at a good percent right now, and the national debt is growing more and more out of hand. By keeping the taxes the way they are, they would help keep inflation at a controllable and reasonable amount and the government will receive more money to help fix the national debt.
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