Bush tax cuts: Not a tax increase. A reset.
Letting the Bush tax cuts expire wouldn't be a tax hike, as many are describing it. If policymakers want to reinstate the Bush tax cuts after they expire, they should be required to find a way to pay for them.
Letting the Bush tax cuts expire wouldn't be a tax hike, as many are describing it. If policymakers want to reinstate the Bush tax cuts after they expire, they should be required to find a way to pay for them.
Bill Gale is very wise in this CNN opinion聽piece.聽 He reminds us that policymakers continue to treat the Bush tax cuts with far more love than they deserve:
Given that the Bush tax cuts (whether all of them or even just most of them that President Obama has always wanted to continue and deficit finance) have proven unimpressive in terms of either short-term stimulus (they aren鈥檛 steered enough toward cash-constrained households) or longer-term, supply-side growth (the large deficits they cause mean national saving falls), Bill recommends this strategy (emphasis added):
This 鈥渞eset鈥� option strikes me as a good idea.聽 It would finally align the current-law and policy-extended revenue baselines, and force policymakers who really want to continue these costly tax cuts to either offset their cost (such as by broadening the tax base by reducing tax expenditures) or defend their deficit financing (harder once they鈥檙e no longer status quo).聽 Also, hitting the 鈥渞eset鈥� button makes getting rid of the Bush tax cuts perfectly consistent with Grover Norquist鈥檚 鈥淣o New Taxes鈥� pledge (yes, really!), because: (i) letting current-law play out and the Bush tax cuts expire is not legislating a tax increase; and (ii) if policymakers then choose (even if fairly immediately and retroactively) to reenact the Bush tax cuts and offset their cost with base-broadening or other revenue increases (avoiding the status quo deficit financing), this would just be a revenue-neutral legislative action鈥�also not a violation of the Grover pledge.
Sounds like a good plan to me!