In the struggling economy more and more attention is being given to budget deficits. The amount of debt is staggering and according to recent reports it does not appear to be getting any better. Many states have suffered declines in revenue not seen since the last World War. A record number of states had to combat deficits by cutting costs wherever they could and raising taxes to boost their revenue. A frightening statistic reveals that between 2009 and 2011 a mere eight states implemented tax cuts. 24/7 Wall St. investigated six states that reported a significant increase in revenue. They found that cutting expenditures rather than bringing in higher revenues was more important to try to combat the deficit.
While the media focused on the increase in revenue from taxes, an expert, Tracy Gordon, revealed that the figures actually showed an increase less than those during recessions in previous decades. However, it is possible that the government may misinterpret those figures and decide to increase 2012 taxes yet again. Many government services had to be cut and this was true even in the states which reported high revenue. Unfortunately those cuts affect education, public health, the elderly and the disabled. It appears that simply cutting costs and raising taxes is not a solution to the economic crises, but with a lack of options it seems unlikely that we will see tax cuts in the coming year. Instead 2012 taxes will likely be raised and government services will suffer more cuts.
A Comparison of Budgets Proposed by Mitt Romney and President Obama
Many people like playing around with budget estimates. This is mainly because budgets force people to set priorities and run the numbers. The annual federal budget is the only time the government is ever sincere with taxpayers.
About 40 percent of government spending goes to Social Security, Medicaid and Medicare. Military spending accounted for 23.8 percent of government spending. Generally, nearly two thirds of 2012 taxes went to an insurance conglomerate and boots on the ground at home and overseas.
The President’s proposed 2013 budget carries similar figures as those found in the 2012 buget. It is important to analyze what the two major contenders for the 2012 presidential race have to say about government spending and revenue collection.
A quick look into the historical budgets reveals that revenue collection has been slow. Some people blame this on Bush tax cuts that were extended to 2010 by the Obama administration. The recent recession that hit most countries in the world is also to blame.
To be fair, to the president, his figures need to add up because he bears the burden of governance. His figures need to unite his party’s congressional wing.
On the other hand, Mitt Romney is trying to outshine his competitors for the Republican ticket, Rick Santorum and Newt Gingrich. He is making promises to motivate party faithful and mollify conservatives. So obviously, his figures will be better than those of the incumbent.
While Obama’s plan would increase revenues to around 19.2 percent of GDP, Romney’s plan would extend Bush tax cuts over the next ten years, collecting 17.9 percent of gross domestic production as revenue.
The presidential race aside, it is important for every taxpayer to run the numbers and see which budget proposal is better.
The Governor of New Jersey, Chris Christie has 2012 Taxes in mind with his ten percent income tax for the people of his state. Christie is also proposing that his tax plan can be applied to the Nation. The 2012 election is in November, and he is setting his sights on the 2016 presidential elections.
Chris Christie has deemed himself an economic architect who has the blueprint ready to rebuild New Jersey’s sagging economic foundation. He is so confident in this strategy that he feels strongly that this plan can bolster this country’s economy and restore consumer confidence. His flat tax rate of ten percent is a stark contrast to the governors of New York, Illinois and California. In all three of these states they have raised taxes and they have been proactive in increasing the tax rates for the most affluent individuals. He has claimed that his economic strategy gives back to the lawmakers and taxpaying citizens, who have sacrificed to help New Jersey’s economy. His image as a fiscal conservative has been further established by substantially cutting state spending. While he has lowered taxes for the wealthiest in his constituency, he wants to reinstate an earned tax credit for those with the lowest incomes, a program he had cut in 2010. His sweeping tax cuts would increase the state’s high deficit.
Chris Christie has a dramatic tax plan, but the downside is who will pay for these cuts. Time will be the judge if a ten percent flat tax will work.