I realize the images are a bit biased, but I just loved some of those Wisconsin signs so darn much, you know!

To actually believe that either of these actions will improve the American economy is naive because the problems of the american economy are deeper and will never be resolved with simple funding through taxes. The problem with the economy is not monetary but structural which needs different measures that have nothing to do with taxes. I know that the pick is about the Wisconsin debacle but like both political parties in the U.S, not to mention in every western economy, they are determined to kill each other in order to save the tree so they are letting the forest die.

Now if we are talking about justice and what is morally right or wrong, then that's a completely different conversation.

I never understood the logic in this. Our education system is failing. There's over-crowding in schools, not enough resources (which is already including teachers), and so uneven it makes me dizzy. So, what do people suggest we do. Take away more money and benefits from the teachers! 'Cuz if we drive away all the teachers (and people who want to be teachers) America will definitely be back on track!

If they insist on taxes, why, logically, wouldn't they increase the taxes for people who have the financial means to handle those increases?

Wait, so basically, we should tax those who are lucky enough to have made there fortune in the world, but not those who haven't?

Sounds a bit unfair.....

-pandawinx.

No, we shouldn't increase the amount the lower and middle classes pay for taxes while lowering the amount the higher class pay for taxes.

@pandawinx - Sorry, the phrasing was unclear. Right now, we have the Bush tax cuts for the wealthiest two percent, which some are arguing needs to be extended to more corporations, and others think should be completely repealed. The option of taxing the wealthiest two percent means repealing the Bush tax cuts that that population already enjoys.

In other words, don't give them a tax break because they are wealthy and have hiring power. History and common sense shows that just because a corporation has more money to spend, they aren't likely to spend it on hiring more people. Which means, these tax cuts aren't creating jobs via the infamous "trickle down effect" like Bush and other conservative economists believe they are.

@Salemslot - You are, of course, absolutely right, in that I don't believe either of these things will fix the economy, or even significantly improve it, but I do think that nixing the Bush tax cuts, which could save us (I think the figure is) around 700 billion dollars in ten years, is a start to chipping away at the iceberg.

I do not believe, however, that cutting funding for infrastructure, such as teachers and health care workers, helps at all. In fact, I think it makes matters worse. Because these people are the real job creators, in my opinion. Taking teachers as an example, a good education system (which bri-marie pointed out, the United States really already doesn't have right now) prepares the youth of a nation to be able to do high tech, high demand jobs. It gives them the skills they need to generate a decent income. Right now, we don't have enough Americans who are skilled enough to do some of our high-paying jobs. So we hire out of country. And, not that I'm against that, but we really shouldn't have to do that.

Not to mention the fact that solving our education problem does not begin with cutting funding, having schools and districts compete against each other for federal funding, using teachers as scapegoats, ignoring the larger issue of poverty, or building more charter schools.

It's like we're doing the opposite of everything we need to do, both to fix education and the economy. It baffles me.

LASTLY: Because these aren't the only way to help improve the economy, the question explicitly asks which of THESE TWO OPTIONS is more effective in that area. Not which is most effective, which will save everything, or which is the better idea.

Cinders, I totally see what you are saying but you are seeing things through long-term glasses but that is the problem with the american therefore the global economy, there is no long-term solution. The economy is starting to already collapse because of the inabilities of the monetary and capital markets to reform and the weak dollar which were always the powers that made US a prosperous country. Investment in infrastructure and high-educated labour force helps in the long run and under certain conditions that are propelled by the open markets. But the issue here is that unless everyone in the economic council doesn't wake up and stop using secularism speeches that diverts everyone from the real problem, nothing is going to prevent the imminent collapse especially now with the crisis in North Africa and the Middle East which will cause a feast for the speculators.

Whether they collect the taxes from the pocket of the common people and the potential development plans or from the elite, it will result to one effect, stagflation. If they collect from teachers, it will cause an even bigger drop in consumption therefore no circulation, bankrupsy of middle and lower class ventures and asphyxiation of the economy. If you take taxes from the elite, they'll go to the developing Third World and you know what will happen then because the only thing that has prevented the collapse of the US are those big corporations that are pillars of the stock and derivative market. But the point is, that these taxes are designed to decrese the debt of the states and the country and equalise it in the future like in Europe, it doesn't have developing reasoning which the markets already know so they are already anticipating bad results so through a law in economics that is called 'signalling', you are already feeling the effects of stagflation today insted of the future. It is self-destructive politics in the financial world. One side, claims high-education is a ray of sunshine and the other side claims you won't have those high-demanding jobs without them. You see the ouroboros absurdity? Personally, I think this is a game for the elections in 2012. Both parties simply want the syndicats to lose power to enforce crueler measures in the future. All this is reminiscent of what happened back in 1995 during the Clinton administration with the 'war against the labour syndicats' which won him the reelection. So I insist no option is effective in that area.

this one is what should be done; but yeah right, like they ever would tax the richest. Not gonna happen. Not that I care; it's not my country.

That works for sure

For sure.
Taxing goverment workers leads to strike and crisis, and why would you even want to tax them, their current wages still aren't fair enough.

It really depends on what you mean by "effective". I think that the GDP would increase if the country cut government wages and benefits and did not tax the wealthiest two percent. That may not be what you meant by the question, but it is what it says. The alternative - taxing the wealthiest two percent and not cutting government wages and benefits - is what we have now. I believe that removing the taxes from the top two percent and reducing spending on government workers would improve GDP.

But I do not in any way think that is desirable. The costs to society outside of the economy with either of those (cutting government benefits and taxing the wealthiest two percent) would be terrible by themselves; together they would spell catastrophe. In another forum, you posted a link to the Mother Jones presentation of financial statistics...that 90% of people in the US (you know, whose average annual income is $31,000?) would increase to something more than 90%.

So I'll readily admit that economics is a field in which I have little experience. But there is one thing I never understood, and that's how tax breaks for the wealthiest citizens improve our economy. I mean, I know the theory - that with more money, there's more room for expanding corporate budgets and hiring more people and producing more, etc. But I don't understand how that theory is expected to work without accounting for human error and corruption. I'm not trying to argue that all corporations are corrupt, but there's clearly some mismanagement going on with that.

I also recognize that cutting wages and benefits for public sector employees is often necessary, and I do see how it can help raise GDP. But (and correct me if I'm wrong) GDP is not the only way one measures the health of an economy, right? Just like taking one's temperature isn't the only way that we know someone is sick. I meant, what would be best for the economy in general. Especially as we might have a large GDP one year and not the next, due to instabilities in our economy. So stability is also a factor, right?

And I just don't see how cutting those costs can help more than nixing the tax cuts (I was under the impression the Bush tax cuts lowered tax rates. I meant getting rid of those cuts and increasing the tax rates. So not what we have now).

So could you please educate me? Because I'm genuinely lost, and should probably have never forayed into economics in the first place. I'm doing that thing that I see people on here do a lot, which is voicing an opinion on a topic I know next to nothing about. :D

There should be more choices though

I don't think either way would help. Our education is already going to the toliet. It's also hard to tax the rich if they've investested their money properly. How can we imporve the economy? Get inflation under control. Give tax incentives to keep buisnesses in the country. Get another silicon valley in. And quit fighting stupid wars.

Cinders: GDP is a nice, tidy, numeric way to measure the volume of an economy, and that is why it is most often used as a very general measure of its health. But if you want to discuss some other measurements of the health of an economy, I'm all for it. But let's define what those are, first.

Here are some common ones, off the top of my head:
* ratio of imports/exports (monetary value and volume)
* national average wage
* rate of inflation (either averaged - what we see most often - or separated by different sectors such as housing, comestibles, energy)
* unemployment rate
* amount of outstanding debt (national and averaged individual)

Other ideas?

No idea, but on link you can find the numbers of the things you mentioned.

Harold, I was thinking more in terms of economic stability. Cutting wages and benefits of public employees is a good short term, but I think we need to invest in our nation's infrastructure rather than, you know, not do that.

But perhaps I don't know what I'm talking about and/or there is no such thing as "economic stability"/long term economic planning, as this is what salemslot seems to be saying...?

Again, perhaps I'm just talking too much about something I know nothing about.

Wait, so basically, we should tax those who are lucky enough to have made there fortune in the world, but not those who haven't?

Sounds a bit unfair.....

-pandawinx.

Unfair, huh?

Married tax-payers pay more than 70% of federal income taxes, not the 5% richest Americans in the U.S. Dual income-earners are funding this countries government. Whatever they receive in refunds pales in comparison to what they're paying in taxes. Now, imo, that's unfair.

ok these are both hard but you really can't take much from the wealthy people esp the ones that actually do what they are supposed to do. If you take from the rich to give to the poor, you are taking money that someone worked hard for and giving it to someone who has even worked as hard. But if you take away from school then the youth will have a tough time so this is kinda hard.

^^ I take issue with your entire premise, and here is why, point by point.

"can't take much from the wealthy people esp the ones that actually do what they are supposed to do."

^^ What are wealthy people supposed to do? Other than make and hoard money. If you mean create jobs, judging by the status quo (which has the Bush tax cuts), they aren't "doing what they're supposed to" considering current soaring unemployment rates, hiring freezes, and lay offs.

"If you take from the rich to give to the poor, you are taking money that someone worked hard for and giving it to someone who has even worked as hard. "

Taxation is not charity. We are not redistributing the wealth and "giving it to the poor," we're giving it to the government to invest in our nation and our infrastructure to build better schools, better fire and safety forces, better sanitation and better public health. Even the wealthy benefit from that.

You also assume that all wealthy people earned that money through blood sweat and tears. While this is possibly the case in many situations, in many others, it is not. Wealth is a genetic advantage. Most people were born into it. Even if they weren't born to a wealthy family, they were probably born to a middle to upper middle class family that was able to nurture and support them through college and trust funds until they made their own millions.

Like I said - some people - very few - claw their way out of poverty and the lower middle class and become millionaires. But even those who jumped from middle class to tycoon had a head start in life because of their situation. Some others - like "trust fund babies" have never known a day of hardwork in their lives, and are wealthy by inheritance or chance. It's a roll of the dice.

"if you take away from school then the youth will have a tough time so this is kinda hard. "

This is absolutely true. Consider the adage "the rich get richer and the poor get poorer." That's exactly what's happening, especially as school district funding is being cut all over the nation, particularly high poverty areas, where kids are already at a disadvantage - again, not for lack of hard work, not for lack of wanting to learn, and not for lack of trying to rise above their circumstances. Simply by genetics and chance.

Lastly - If we took away tax cuts for the richest 1% ONLY - we could increase revenue... a lot. I do not have the statistics, I'm sorry, but it's true. Look at link to see the enormous disparity between the earnings of the extremely wealthy in this country and the so-called middle class.

And then tell me how any of that is fair.

I was raised to believe that you take what you need, and give back where you can. If you take too much, you deplete the resources. Judging by egregious gap between even rich and filthy rich in this country (see how much less the top 5% make compared to the top 1%), I think some people are taking way too much and not giving any back.

Still need convincing? Mother Jones Magazine points out the disturbing income link and exactly what's causing it.

By the way - Bill Gates donates billions to charity every year, and he still believes he should pay higher taxes.