Bush Tax Cuts
The Bush Tax Cuts will expire at year end. Most reporters add, “unless Congress agrees to extend them”. There should be by now little confusion. The Bush Tax Cuts will expire at year end.
From what GOP and Democrat party members have said publicly, there is simply no grounds for any type of compromise. Even more to the point, there is no politician who dislikes granting tax reductions, so if the Bush tax cuts expire, then there is ample opportunity to reduce taxes again.
The GOP position that there should be no tax rate increases is shameful and unsupportable on the basis of historical fact. According to most economists, increasing taxes on the top 2% will have no effect upon job growth nor investment.
The GOP argues that changing the tax code deductions is a better course. While most people would agree that the tax code is far too complicated, which deductions to eliminate has little common agreement. If sweeping revisions were made, the resulting increased tax revenue would impact the discretionary income of the middle class more than the top 2%.
You might say, “so what, everyone will be effectively paying more in taxes”. So let’s look at the other half of the bargain, entilements.
The largest segment (about half) of the annual deficit comes from Medicare and Medicaid expenditures (in excess of how much is collected in wage taxes). The excess expenditures are in the range of $500 billion per year. How can the deficit be brought under control without modifying in some manner these programs?
Democrats are divided on this subject (no modifications to a little to a lot), and it is highly unlikely any agreement amongst them will be reached in the next few weeks. Any movement on entitlements must impact the discretionary income of the Middle Class greater than the top 2%. Hmmm. More taxes and more Medicare payments… I don’t predict Democrat support without the cover of the rich paying more.
So, no movement on entitlements, no movement on taxes. Plain and simple. QED, Bush Tax Cuts expire.
It is also unlikely either the President or Democrat Congressional leaders will outline their ideas until January. In January, one might anticipate Congress agreeing upon cuts in Medicare (meaning recipients would have to pay more) and Medicaid, and offsetting these increased costs with lower taxes for the Middle Class.
Hmmm, sounds like funny money.