Posts tagged Bush tax cuts
I concluded a prior post on my own blog with the following statement:
As I mentioned, I have yet to find a single economic study that purports to show evidence that any income tax cut has ever paid for itself. If anyone who reads this should know of one, please leave a comment with a link to that study. Thanks.
I received a couple of replies to that request but neither of them focused on income tax cuts in the United States. One focused on capital gains tax cuts and the other focused on countries with relatively weak tax authorities where tax cuts might increase compliance (like Russia). In any case, I replied to both. I also have not found an economic study that shows an income tax cut paying for itself from any other source. However, I am continuing to search for such a study and have posted links to any related information that I’ve found at this link. I believe that only one of those links is to a study that purports to show a tax cut that paid for itself. It is a paper published by Laffer Associates titled “The Onslaught From The Left, Part III: The Capital Gains Tax”. (more…)
I’ve written about the upcoming Congressional fiscal challenges several times before. It’s sort of a tradition by now. I feel obligated to document the play-by-play for the current games so as to keep the story moving along.
We are rapidly approaching the Fiscal Pothole. Much has happened in the last two weeks. We’ve got less than four weeks until the deadline hits. Come the New Year, the Bush-era tax cuts expire, the 2011 Debt Ceiling cutthroat sequester goes into effect, unemployment insurance payments run out, the FICA Tax Holiday once comes to another end, the Medicare Doc Fix needs to be fixed again, and the Alternative Minimum Tax needs its annual goosing. To top it off, America runs back up against the debt ceiling shortly thereafter.
Will we survive this catastrophe? Can disaster be averted? What have the players been doing? Activity comes fast and furious. Who will survive?
President Obama submitted to Congress a plan that tackles all of these issues, quite an ambitious achievement. It includes a four trillion dollar deficit reduction over ten years, extends the Bush tax cuts for everyone in America on the first $250,000 of income, extends the payroll tax credit and bonus depreciation for business investment, makes permanent the Alternative Minimum Tax and Medicare Doc Fixes, along with another package of routinely expiring tax provisions — mostly for businesses — known colloquially as tax extenders. That’s just the beginning. (more…)
There is a tradition of Congress spending somewhere around four to six weeks finishing up business between the time of an election in November and the time a new Congress is sworn in the following January. Some of these lame duck sessions are productive, and some are not.
The first thing we’ll be dealing with in the upcoming lame duck session is the “fiscal cliff”. There are three major issues there — the expiring Bush tax cuts, the Supercommittee sequester, and raising the debt ceiling. A number of other related questions might also be considered — the expiring FICA payroll tax holiday, extended unemployment benefits, and the annual rituals of altering the Alternative Minimum Tax and the Medicare “Doc Fix”.
We’ll be told these are vital, urgent, must-decide questions, that have to be resolved before January 1, because that’s when they all kick in. We’ll be facing economic disaster, and probably another major recession if we don’t act before The End Has Come.
The panic is overblown. Congress enacted a continuing resolution that funds the federal government at current levels through some time in March, so most of these will have little impact, if any at all, until then. The Treasury Department can engage in various accounting gimmicks to keep things funded for at least another thirty to sixty days past the beginning of the year whether the debt limit is raised or not. The matters that would be noticed immediately by most Americans is if the Bush tax cuts and the payroll tax holiday expire on schedule, when take-home takes a noticeable (though hardly crippling) hit.
These things all have to be fixed. They don’t have to be fixed in a mood of panic. The actual urgency is a political one — what these things mean to Republicans.
At first blush, it may seem that nothing has really changed in Washington after Tuesday’s election. Barack Obama is still president, Democrats still have a majority in the Senate, and Republicans still control the House. In reality, the dynamic is radically different. No where is this more obvious than in the matter of the so-called “fiscal cliff” (which is more of a pot hole), wherein Democrats now hold all the cards. The altered reality will be clear in the Congressional lame duck session, and this may well set the mood until the midterms.
Two votes happened in the U.S. Senate last Wednesday, votes which highlight how Republicans and Democrats feel about tax rates.
Senate Republicans voted to raise taxes on all Americans. Senate Democrats voted to avoid raising taxes on all Americans. A Democratic-sponsored bill that limits tax increases was passed, despite Republican opposition. Republicans are now insisting that the bill the Senate passed has no chance in the Republican-controlled House. In other words, Republican votes could force everyone’s taxes to go up.
How in the world will Grover Norquist spin this?
That’s not the most amazing part. Democrats have been trying to make the argument that Republicans only care about the super-rich. Republicans have been trying to deny this charge. So to demonstrate their position, Senate Republicans forced a vote on a bill to lower taxes on the super-rich as the quid pro quo for avoiding tax increases on everyone, apparently not noticing that this proves the Democrats’ point.
Let’s review how we got into this peculiar situation. (more…)
Remember over last year or two, how Republicans repeatedly threatened financial disaster? Like high school drama queens in some teenage soap opera, they manufactured one crisis after another. We’re on the verge of another series of showdowns. Get your scorecards ready.
We had the debate over extending the Bush tax cuts at the end of 2010. Republicans insisted we needed to maintain those tax cuts, especially for the wealthy, or else in a fit of piqué the spoiled rich kids would pick up their marbles and stop creating jobs. Part of the deal for extending the cuts included expansions of Pell grants for college students and a temporary reduced payroll tax for America’s working people.
Then, in April of 2011, America found itself on the verge of a government shutdown. 800,000 federal workers came within a hair’s breadth of being temporarily out of work. The spending appropriations finally passed, after an unnecessary soap-opera-like drama. Then we had the debt ceiling debate the following summer. Republican reluctance to raise the debt limit to finance the spending they’d already approved resulted in the first-ever downgrade of the US credit rating. The eventual deal included the creation of a “Supercommittee” charged with finding nearly two trillion dollars in additional debt reduction.
The Supercommittee failed, due to Republicans refusal to consider even one dime in additional taxes. (Thank you, Grover Norquist, the de facto czar of America’s tax policy.) This means we have massive automatic budget cuts set to kick in beginning in January.
Many of these bad deals are coming back to haunt us. The sequel approaches. (more…)
I have earned a deserved reputation for opinionated articles. The following is an opinion piece. Be warned.
Once more, we’re approaching a deadline. Once more, the Tea Party wing of the Republican Party is holding America hostage. We saw it three times last year, with battles over the budget and the debt ceiling. We approached a government shutdown and a default on the national debt. We are now approaching a tax increase for one hundred and sixty million Americans. In all cases, these were not surprises. They were easily foreseen, and should have been avoided. These were not crises. They weren’t even battles over the deficit or the debt limit or whether we should now have a tax increase.
Republicans are not standing in the way because they oppose taxes or want to balance the budget or think it’s a good idea to default.
It’s all about ideology and purely political maneuvering. (more…)