Late last night, just before midnight in fact, Congress finally approved the Bush tax cut extension for two more years. This means that workers of all tax brackets will pay less in taxes than previously planned for 2011 tax rates. This includes an extension of the $1000 per child tax credit, tax breaks for college students, and lower capital gains and dividends tax rates. Also included is a 2% cut in the social security tax, which will go from 6.2% down to 4.2%. That means for someone making $100,000 per year, they will have an extra $2000 to take home. Overall, this should be a good thing for the economy and hopefully stimulate job growth in the end.
The downside of this is that there were not any spending cuts to offset the lower tax revenues that will be coming in. Government spending will continue at the same pace, which means our nation’s deficit will continue to grow. So basically, both sides of the isle got their way for now.
One obvious question that comes to my mind is this: With social security already on the brink of bankruptcy, should we really be cutting it’s funding?
I would love to hear your comments and opinions on this matter. Feel free to comment below. Your identity and contact information will not be visible on this site.