The debate of taxing the rich to stimulate business growth is an economic theory which does not clearly indicate the brink at which the federal debts would start endangering our prosperity and economic stability. Many European nations have implemented the austerity plans to reduce the chance of defaulting national debts. It is better to adopt the austerity plan to maintain our credibility in the financial markets. The austerity contingency plan could take the potential downsides addressed by the enlightening book Jobenomics into account. Chuck Vollmer, the author of this book provides an outline of critical areas. You can get a copy of this book from www.jobenomics.com.
Even if our economy recovers, increased taxes would be the real problem for our government. Vollmer stresses that increased tax is one of the critical areas to be included in the astringent plan. Our government has no other way to operate without increasing taxes. If it does not take attempts to create 20 million new jobs by 2020, taxes will increase significantly for the rich and even for the middle class.
High unemployment and debt crisis have raised the tax rates for rich Americans. The Tax Foundation Study specifies that federal income tax rates would be tripled in the near future, in order to balance the budget deficit in 2010. The Federal Reserve Board and the Social Security Board of Trustees agree with the Tax Foundation.
We all know that the wealthier people need to bear the biggest tax burden, but most of us do not know about the gap between tax payers and tax consumers. Many experts estimate that the 40% top earning families in our nation will transfer nearly $1 trillion to the remaining 60% low earning group in the year 2012. It is estimated that 50% of bottom level taxpayers do not pay income tax at all.
The employer is yet another endangered taxpayer group. Employment taxes were nearly $877B in 2008. The tax burden is too heavy for businesses, especially the smaller ones. Some experts argue that increased taxes on the rich are inevitable. Some others feel that tax cuts are essential to stimulate business growth. Though these two arguments have strong bases, they do not provide a comprehensive solution, in case the economy fails. Hence, it would become important for the federal, state and municipal governments to devise new forms of direct and indirect taxes to operate.
Vollmer insists that a national sales tax can be established to minimize this problem. The austerity contingency plan would help to balance tax increases for the wealthier, reasonable tax increases for the middle class and targeted tax increases for businesses. It would also assess the outcomes of increased state taxes, local taxes, national sales tax and hidden tax.
Jobenomics insists that creating 20 million private sector jobs by 2020 can be the best alternative to implementing an austerity plan. However, there are possibilities of facing some malicious events, such as Second residential real estate crisis, nuclear exchange between Iran and Israel could affect the process of economic recovery. If such events occur, an austerity plan would be useful in managing the downsides.