TAX NEWS - 2010

U.S. Tax: No Tax Break for the Middle Class

After slipping for most of last week Wall Street edged forward during trading on Tuesday. The Dow Jones (0.59 percent, 57.14 points) and S&P 500 (0.54 percent, 5.48 points) put together strong gains at the closing bell. The NASDAQ (0.10 percent, 2.09 points) followed much further behind, but still gained at the end of the day.

In spite of relatively strong numbers yesterday most insiders expected Wall Street to slip in the morning Wednesday. However, investors were able to push forward in the morning despite worries. After one hour Wall Street had already topped its gains from the previous day, but weak movements from Europe may drag back the morning rally.

In other news, according to CNNMoney.com, the ongoing deficit woes in Washington may lead lawmakers to pull back the Bush-era tax cuts for the middle class.

The middle class has suffered the brunt of this economic decline and they also carry much of the tax burden in this country. However, a nation as large and expensive as the United States cannot survive by continually cutting taxes. President Bush pursued many policies that were politically expedient, but disastrous in the long term. These tax cuts were one such disaster.

There is nothing wrong with cutting taxes, but if you cut revenue while increasing spending you are setting the government up for a fiscal crisis. The Obama administration will likely keep taxes at their historic lows for the time being, but eventually one party is going to have to bite the bullet and raise taxes. If they continue to fail on this issue we will all be much worse off in the future.

According to Bloomberg News, Nobel Prize-winning economist Paul Krugman has taken yet another shot at the American economy and the government's recovery strategy.

Krugman is an outspoken proponent of stimulus spending to save the economy, and from day one he was opposed to the diminished size of the Obama stimulus and the useless tax rebates that were grandfathered in. When people get a tax rebate check the money is put into savings, essentially acting as a boost for banks. It does nothing for the general economy. Krugman is one of the world's foremost economic minds, yet his call for a national jobs and infrastructure program have largely fallen on deaf ears. Now, with the U.S. edging closer toward a full-scale collapse, his calls are becoming louder than ever.