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Saturday, September 1, 2012

Approach and language for expiring tax cuts

It seems somewhat surprising that the talk about the tax cuts that expire at 12/31/12 seems to ignore the following:
  • Do we know what "temporary" means? The temporary cuts were already extended for 2 years back in December 2010. If extended again, aren't they becoming permanent, only with lots of extra drama and anxiety?  The Social Security reduction for employees and self-employed was for temporary economic stimulus. If still needed, perhaps it really didn't create any stimulus. Meanwhile, with a depleted General Fund, how can it continue to backfill the Social Security Trust Funds for the cut?
  • Why is so much of the debate on what to do with the 2001/2003/2010 tax cuts focused on which groups of individuals should continue to have them?  Why not look at each provision and determine, hopefully with a focus on principles of good tax policy, which should stay and which should truly be temporary?  For example, why note move the top capital gains rate back to 20% (18% for assets held over 5 years) for everyone?  Why not reduce the child credit back to $500 and eventually either phase it out which increasing the dependency exemption, or convert that exemption to a tax credit?
  • Why continue to delay comprehensive tax reform?  There has been lots and lots of discussion, debate, hearing, reports, studies, etc. Let's join together and craft a plan that reflects today's ways of living and doing business, follows principles of good tax policy and includes a plan to reduce the deficit and debt?
For a nice overview to what might happen and the timing, as well as planing tips, see Laura Saunders, "Countdown to a Tax Hike," Wall Street Journal, 8/31/12.

For a list of what expires and when, see the Joint Committee on Taxation reports on this topic.

For a list of tax reform hearings in the 112th Congress - click here.

What do you think?

1 comment:

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