Wednesday, July 28, 2010

Taxwise, It's Beginning to Look a Lot Like Christmas

Conventional wisdom says the Democrats will wait until shortly before Election Day to extend the Bush tax cuts for couples making less than $250,000. Raising income-tax rates for other taxpayers will attract votes, the theory goes, because voters want to "soak the rich."

As for the estate tax, Senator Judd Gregg offers a decidedly minority opinion: "It’s my understanding they are close to an agreement which I hope we can obtain before we leave for [August] recess…."

More likely, estate tax arguments will drag on into November or December.

Will Republicans offer to support extension of the 2009 version of the estate tax if the Bush income-tax cuts are extended to all brackets?

If thwarted, will Republicans let the bad old estate tax reappear, hoping to repeal it after retaking control of Congress?


Jim Gust said...

Raising tax rates in a depression, even if only on "the rich," is a recipe for electoral disaster, and many Democrats know it. The country at large is far less jealous of wealth than are leftist Democrats.

If you like the annual ritual of patching the AMT, you'll love my prediction. A one-year extension of the Bush income tax cuts for everyone. Let's have this fight every year!

As to the estate tax, I predict adoption of Kyl-Lincoln by Memorial Day next year.

Jim Gust said...

As further evidence that Democrats won't raise taxes on the rich, let me point out that they still haven't been able to boost the rates that hedge fund managers pay on their earnings above 15%!