Magazine November 29, 2010, Issue

Tax Extension

President Obama makes remarks about a simpler tax code and tax relief in Washington, D.C., April 15, 2009. (Jim Young/Reuters)
Letting rate cuts on top earners expire would cost more than it’s worth

The 2001 and 2003 tax cuts are set to expire on December 31. In the months before the election, the White House pressed the case for permanently extending tax cuts for households earning $250,000 or less, while congressional Republicans insisted on extending all of the tax cuts, including those for high-income households. Dozens of congressional Democrats, many of them facing tough reelection battles, came to embrace the Republican stance, forcing the Democratic leadership to punt on the issue until the lame-duck session.

As Princeton political scientist Larry Bartels recently argued, the politics of the tax cuts rests on the influence of

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