Tax Cuts 101: A Lesson From the White House

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For weeks, legislators in Washington have been embroiled in a heated debate about whether to extend Bush-era tax cuts on those making $250,000 or more, which are set to expire at the end of this year.

Republicans have argued that letting the tax cuts expire would hurt small businesses and the economy, while Democrats insist that keeping the tax cuts alive would siphon out billions in tax revenue that could make a sizeable dent in the national deficit.

Now the White House itself is entering the debate, hoping to simplify the issue by going back to the drawing board, literally.

On Thursday, the White House debuted its first ever White Board lecture, in which a notable figure in the White House takes a few minutes to break down an issue currently being debated in the media, with nothing but a white board, magic marker and their ingenuity.

The first White Board lesson comes from Austan Goolsbee, who was promoted earlier this month to Chairman of the White House Council of Economic Advisors.

In this video, Goolsbee breaks down the tax breaks into a series of bubbles, each larger than the one before it, representing the amount of money saved by the different income brackets. Goolsbee explains that under President Obama’s plan, every American, even those with higher incomes, would be entitled to some tax cuts, but what Obama would change is the amount of money that those in the uppermost brackets would keep.

“Under the Republican plan however, people making more than $1 million a year are going to be getting a tax cut of more than $100,000. That’s expensive,” Goolsbee says in the video, before pointing to a giant ominous red dot representing the $1 million tax bracket. “Giving these big red eggs to the very high income people would cost $700 billion that we would have to borrow to give it.”

Goolsbee argues that most economists agree this tax cut for the wealthiest Americans will not help the economy but in fact will only hurt it.

To learn more about the details of the tax cut proposal and why it is the subject of so much debate, check out this article on MainStreet.

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