Tax Cut Resulted In Largest Rise in U.S. Incomes Since 2008

[Dont Taz Me Bro]

For January, consumers boosted spending on durable goods, items like new cars, and on nondurable goods such as food and gasoline. But they trimmed spending on services.

The 1 percent rise in incomes in January would have been a much more modest 0.1 percent gain if the effects of the tax changes had been excluded.

The rise in incomes and small increase in spending meant that the personal savings rate rose in January. Households saved 5.8 percent of their after-tax incomes, up from 5.4 percent in December. For all of 2010, the savings rate was 5.8 percent. That's down slightly from 5.9 percent in 2009. But it is well above the 2.1 percent savings rate in 2007, when Americans were spending freely as the value of their homes surged to record levels.

Since the housing bust and steep recession, Americans have been more cautious. The savings rate has more than doubled from the 2007 level. The effort to increase savings has acted as a drag on consumer spending. But economists say it should result in stronger spending in the future after consumers pay down debt and boost their savings enough to feel more secure.

Largest rise in U.S. incomes in over year - Business - Stocks & economy - msnbc.com

We see yet again that reducing the overall tax burden on the American people helps lift Americans up and increase their standard of living. To play devil's advocate, however, what of the long term affect of the added debt since government spending continues to increase? Will it have been worth it in the end?

 

[rightwinger]

2008?

You mean since the Bush Recession started?

 

[skeptic]

personal income did not rise because of the tax cuts, after tax personal incomes did however. There was no magic renewal of our economy.

This is a superficial benefit. Esp since the tax cuts have to be financed with new debt.

We could eliminate taxes entirely and finance the entire state with $3.5 trillion in new debt each year. Would that increase American's standard of living? For how long?