by Rex Trulove

Created on: July 26, 2010

The simple fact is that the federal government has no money of its own. The income it derives comes primarily from taxes levied, sometimes openly and sometimes not quite as in the open. Since many programs and agencies do a good and important job, this makes taxes necessary, to a degree. However, unrealistic taxation is another matter.

The Bush tax cuts lowered the amount for many people, including families and small businesses. This stimulated growth in the private sector, and it led to increased spending. This was something the stimulus packages were supposed to do, but really didn't. The whole idea is rooted in a concept that has proven to work, repeatedly.

To truly understand the principle, it needs to be understood what happens when taxes are lowered. This is the key to realizing why the tax cuts should be extended.

A tax cut doesn't actually increase the revenue a family or small business has. The money was theirs to begin with. However, it does give them more funds to work with. Families have more money to spend on things that they otherwise might not. Small businesses can afford to hire more people or to expand the business.

This helps the economy directly. At the same time, it actually increases the amount of money the government receives from tax revenue. More employees mean more people paying federal withholding tax. More goods purchased leads to payment for other taxes that aren't quite as open, and it helps the businesses so they can expand even more and hire yet more people.

This has a positive affect on stimulating the growth of the economy, while giving the government more money to work with. The exact opposite happens when taxes are raised for the same reason. Not extending the tax cuts would be the same as raising taxes, especially in light of the fact that many taxes have already been raised in the last few years.

Right now, our economy is in poor shape and unemployment rates are extreme. If any time would be a good time to raise taxes, this sure isn't it. It can also be well argued that no time is a good time to raise taxes. Each time they are lowered, the economy is helped. Each time they are raised, it is hurt.

The folly of not extending the tax cuts is summed up by a quote from Albert Einstein, "Insanity: doing the same thing over and over again and expecting different results."

It doesn't take a genius to figure it out, though. Most of the American people should be intelligent enough to understand that not extending the tax cuts would figuratively be shooting ourselves in the foot, when the other foot isn't in very good shape to begin with.

The American people and American businesses can't afford yet more taxes, on top of the burdens they now have to bear, and are facing in the near future.

If the state of the economy is honestly important to anyone in Washington, D.C., the best idea would be to not only extend the Bush tax cuts, but to also expand them. If this is done, they might just be surprised at how quickly the economy begins to recover. It is up to the US Congress and the American people, their employers.

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