Efficacy of the Taxes Act 2003

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Outline

This paper critically examines the efficacy of the Taxes Act 2003, passed by former President Bush by cutting personal taxes and depreciation rates, in order to create more incomes and thus increase consumer spending, leading to higher GDP and lower unemployment after its passing.

By using economic models, it is sought to show that marginal propensity for increased income would be more than marginal imports, thus creating surplus funds for social good. However, the assumption that consumption and imports bear a nexus to disposable income may not be applicable in all cases.

While this article has been partly successful in its approach and argument, it has failed to provide robust recommendations on how to address this dilemma.

Introduction

Did she/he set forth a clear purpose of analysis and the question at issue (that is the problem or dilemma) very clearly? Explain fully why or why not.

Yes, to a certain extent, there was a clear purpose of analysis, and this was in terms of critically examining the Taxes Act 2003. The dilemma was in terms of whether after the passing of the Act, the aims and objectives of this Bill had been achieved, especially in areas of higher GDP, lowered unemployment brought about by reduced tax rates, which normally should increase spending and make the economy flush with funds for investments and higher employment rates. It is believed that “savings from the capital gains tax cut would be concentrated among higher-income individuals, and as a result the savings were less likely to be spent and would produce only a small economic stimulus.” (Krawczyk and Wright, 2009, Para 2).

The clear purpose however could not be fully determined since the graphs were not consistent and matching with the commentary. Moreover, there are also unexplained definitions and key terms with regard to financial terminologies used.

The Concepts: Did she/he give a concise description and definition of the concepts? Explain fully (Please identify the concepts)

The main concepts have been the economic concepts which state that

Total income = Consumption (as a function of disposable income) + investments (function of Interest r) + exogenous government exports + exogenous imports – Imports (as a function of disposable income). (The 2003 Tax Cuts and the Economy: The underlying Concepts). It is believed that when income increases, consumption also increases, since this report assumes that income is linked with consumption and imports, but the additional inclination to consume is higher than additional inclination to import.

Analysis: Did she/he employ comprehensive thinking to analyze, synthesize, and evaluate the facts, concepts, and values that together form the case with a view to testing somebody or bodies of principles, proposals, or procedures…? Explain fully

The author has taken recourse to diagrammatical representation to analyze, synthesize and evaluate the topic. The aspect tested is whether legislation has impacted upon growth and reduced economic uncertainties, like unemployment. While this study has believed that the bill may have been partly successful in increasing growth rates (GDP), it is seen that it has not been able to consider whether unemployment has been addressed. Further, it is also seen that the reasons for the bottom dip and later increase in lending rates and fiscal position have not been addressed. It could be apparent and best surmised that the upward curve to the left in lending rates and fiscal position and would have been due to other factors and not due to the direct impact of Bill 2003.

Conclusions/recommendations: Did she/he summarize the findings and conclusions and include specific recommendations for action. Explain fully.

To a certain extent, the summarization of the findings and conclusions has been made, but these could have been better structured and presented. For one thing, the nexus between the economic concepts used and their implications on unemployment rates have not been delineated; for another, the diagrammatical representations have not been lucidly explained. The recommendations have been scantly stressing only upon the fact that direct methods rather than indirect methods to reduce unemployment rates may be used. What these direct methods are have not been mentioned or discussed.

Style: Did she/he use quotations, paraphrases, and summaries appropriately?

Yes, largely, the quotations, paraphrases and summaries have been reasonably appropriate. The correct APA citation has also been, by and large following.

Reference List

Krawczyk, K and Wright, L. (2009). Dividends and capital gains planning after the 2003 Tax act: Economic effects. The CPA journal. A Publication of the New York State Society of CPAs. Web.

The 2003 Tax Cuts and the Economy: The underlying Concepts. (Provided by the customer).

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Efficacy of the Taxes Act 2003

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