With this pronouncement, we will see people will hoard there money because of the expectation they will have less in the future. People are rational and when they know they will have less money in the future they make adjustments today.
My question is why wait to 2010? If it is okay to keep tax rates low now, while the economy is bad, why wouldn't he keep them low forever? The answer is he knows low taxes stimulate the economy and give businesses and entrepreneurs incentives to innovate and grow their business. By saying the taxes you pay now will be higher in the future, he effectively erases any benefit of our current lower rates.
Another point to think about is, when new tax cuts are proposed, don't put a life expectancy on the tax rates. Liberals are using the 2010 "expiration" and acting like lawyers and twisting words to their liking. Any movement up is an increase. In 2011 the following will take place:
- The top income tax rate WILL go from 35% to 39.6%. THAT IS A TAX INCREASE.
- The Capital Gains rate will go from 15% to 20%. THAT IS A TAX INCREASE.
- The Estate Tax rate will go from 0 to 55%. THAT IS A TAX INCREASE.
A parting thought on taxes rebates. They give out rebates to make you think the government is paying you money from their own coffers. Remember, government exists because they take money away from working people through taxes and fees. If you receive a tax rebate and don't pay taxes, you aren't getting a tax cut. You are taking money from your fellow citizens who were forced to pay it to the government and then the government decides who should receive that money. It's called social engineering and it is detrimental to economic growth and capitalism.
