Bush Tax Cuts Expiring In January, Ed Butowsky Says Thats Not Good

Ed Butowsky, Managing Partner of Chapwood Investment Management, joins Stuart Varney and Co on Fox Business News to discuss the impact of extending the Bush Tax Cuts for the middle class only.

A little about the tax cuts and how they were setup. The bush tax cuts are essentially laws that were passed by the Bush administration to help the economy. According to the law in January 2011 they state they will not renew themselves removing the stop gaps that exist to ease the tax burden on everyone. So in January in less then 4 months the taxes will reset to what they were before these changes. So back to our story...

Ed Butowsky, in his review of the situation, makes a clear cut point that by no extending the tax cuts to help stimulate the economy you in fact hurt the economy. Moreover if this administration is entertaining the idea of only extending to those individuals making less then $250k / year that too is hurting the economy. Why? Lets understand his point. Today 95% of the taxes in this country come from 5% of the population. That's the 5% that is wealthier americans. They are also the part of the equation in this economy that invests in business, hires workers to do business, essentially they are your key player on the basketball court. If you take out your key player what do you think is going to happen? You might win, but statistics shows in this kind of game you will typically loose. Not just loose the game, but for the purposes of this discussion you will loose their confidence in this market/economy, administration, and may take their money elsewhere. As Ed Butowsky summarizes, the impact of allowing the tax cuts to expire for the wealthy and the ramifications of inflation on the economy is not the way to fix the economy.

So knowing that this about to happen, you can imagine that the wealthy are looking for places to shelter their money. What are they doing in preparation? Are they investing in opportunities that will our economy? Time will tell.