● The extension of unemployment benefits is bad policy, which, ironically, will hurt the Democrats politically, because it will keep the unemployment rate artificially high.
● It’s good to get the tax-cut extension enacted now so that the budget focus next year can be spending cuts and more spending cuts.
● The end of Obama’s Make Work Pay credit is a good thing, because it was mainly just a spending subsidy program hidden in the tax code.
● The next tax deal between President Obama and the GOP should be to enact the fiscal commission’s corporate-tax-rate-cut proposal.
● The unified front shown by Republicans on this tax extension was very important. Centrist deficit hawks dream that Republicans will just give in and sign on to big tax hikes in some future budget summit, as occurred in 1990. Today’s news suggests that won’t happen for the time being.
● The message of the election was not that Americans thought that their taxes were too low, but that the government was too big. If the Republicans can show a similar united front on spending cuts next year, we could really make some budget progress.
— Chris Edwards is director of tax-policy studies at the Cato Institute.
Keep in mind one lesson of the '86 tax act - cutting corporate rates in exchange for increasing personal rates can be politically doable and economically beneficial. Of course, the devil is in the details.
Another of many lessons from that era was that base broadening for rate reductions has to be accompanied by a sense that the left will not start trying to raise rates the very next day. Also hard to do.
Reply to this commentLinkReport AbuseThoughts on the estate tax?
Reply to this commentLinkReport AbuseThe message was that Americans want adult leadership. This is insane. A two year(?) extension of some tax rates. SS tax cuts when the program is already broke? Unemployment (welfare) payment extensions beyond 2 YEARS! Yet they're bringing back the estate tax that costs more to administer than is paid in. And this at the rate that the republicans wanted? What a waste. I'm seeing in the new republicans the same complete absences of principles that turned me off the last 8 years. The country needs gridlock so people can know what to expect and people and businesses can make decisions understanding what the playing field will look like for a while. Instead we're getting more temporary rate machinations simply so the politicians will have an issue in a couple years. What a bunch of irresponsible sycophants. This country is sorely in need of leadership. I really hope Gov. Jindal is willing to step into the gap.
Reply to this commentLinkReport AbuseThey caved! We need to keep pruning the Senate until all the Republican Cowards are gone! At the least the Democrat vote their conscience.
Reply to this commentLinkReport AbuseArthur - the results of the 1986 tax act has been record deficit spending year after year, president after president, decade after decade....rich people are not the "problem" the issue is the decline of the middle class by the rich people sending tens of millions of jobs to China in an effort to pressure US worker wages down. The RICH in America simply hate Americans, and think they should have it all for themselves. Class Warfare? Yeah, from the top down....they spend the money then move to another country when they have left America with an empty bag of air and receipts.
Reply to this commentLinkReport AbuseObviously, corporate taxes cannot be set by Congress and so they should be on autopilot like entitlements. The US corporate tax rate should follow some index rule like (lowest tax on corporate profits in the OECD excluding the US - 1%) or some qualitative measure like if the Europeans, Canadians and Chinese are all happy with our rates then they are too high. Another such qualitative measure would be to start at the Irish (or Cypriot)corporate tax rate then lower the tax rate by 2%/ year until corporations stop paying royalties on their intellectual property to dummy corporations outside the US.
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