If W's tax cuts taught us anything it's cuts come with consequences

By Dian Vujovich

Everybody is yipping about taxes. Yes, it’s that time of year but given the economic mess America is in, and the upcoming election, the noise on the subject has gotten louder.

In 2001, George W. Bush’s tax cuts changed America. The move, while generous and refreshing, was also hugely short-sighted and ought to stand as a perfect example of what not to do when you wake up one day and realize that you’ve got a bundle of money: Don’t spend it all. Why not? Because no one ever knows what the future will bring or the obstacles they will encounter along the way to that future.

Unfortunately, as a result of Ws cuts and Obama’s refusal to make changes to them when the opportunity arose, today the U.S. is left holding a bag not filled with holiday toys and candy but debts and IOUs.

Those cuts impacted pretty much everything from the federal estate tax— in 2010 it resulted in a zero estate tax liability for anyone who died that year—to individual tax rates and the dollar amounts allowed for charitable giving.

I don’t know the real reasons behind Ws cuts. Perhaps they had to do with his personal philosophy regarding taxes and the surplus of money in U.S. coffers when he took office. Or, hopes that the move would result in things like more charitable giving.

Whatever, during the eight years of his presidency and the years since, our economy, the world’s and the markets have changed dramatically. Consequently, any surplus monies are long gone. Plus, the tax cuts have resulted in a decrease in revenues at a time we need those revenues the most.

Of course Mr. Bush, like any president before or after, had no idea of what was going to happen during his time in office. But every presidency can teach us stuff. And that brings me back to what might be the best—and easiest to understand—money management lesson of all and one each of us can learn from. It’s one we can credit George W. Bush for and it is: If you’re fortunate enough to have some extra money don’t spend it all. Ever. Period.

Keep that in mind as you begin this Season of Spending, buys and sells, charitable giving and tax calculating. Yes, make sure to be generous—just don’t give away the farm.