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Greg, you should have studied a bit more for this test.
Taxes. The only difference between the Bush tax plan and the Kerry tax plan is that Kerry wanted to add another bracket to the tax rates for individual taxpayers, adding 4% to the marginal rates for those with taxable income over $200,000. If your taxable income is, say, $250,000, the 4% would only apply to the last $50,000. The tax on the first $200,000 would remain the same, and the additional tax on that $50,000 would cost you $2,300 a year, or about $45.00 a week. If your taxable income is $200,000 or less, then there would be no increase in tax.
As a shareholder in an S corp, you realize that the S Corp itself pays no federal incomes taxes, so any change in corporate taxes would not affect you.
What you also fail to realize is that whether or not the government takes that extra 4% on high income taxpayers, it is still going to spend that money. If the government doesn't collect the tax revenues to meet its obligations, it has to borrow the money, and in doing so, competes in the money market. More competition in the money market has two effects. First, it drives up interest rates, with more borrowers chasing a limited suplly of money. Second, rising interest rates diverts money away from capital markets, so there is less capital formation, not more. So what the government is going to do is forego tax revenues, and then borrow that money from the people who benefit from that tax cut. It's like telling your customers that you're no longer going to charge them for the goods and services you provide, but instead, you're going to give them those goods and services and borrow the money from them to pay your costs. And then pay them back, with interest.
If you remember, the last time we had a sustained tax decrease coupled with massive deficit spending, after the 1981 Reagan tax cut, inteset rates spiked for about six years, with the prime nudging 20%. The prime came down as many of the tax reductions in Reagan's supply side economy were rolled back in 1982, 1984 and 1986. And through the first four years of the Reagan years, the only segment of the economy that did well was commercial real estate, which was especially favored in the tax bill in 1981. And that all came crashing down in 1986 when those tax advantages were rolled back.
You really have to study harder for these tests.
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If you are so sure that Bush will give you security, you should read the article I just posted about the empty munitions bunkers. Seems they *WERE* emptied under our watch! (nmi)