Monday, October 04, 2010

Taxes and Promises, Taxes and Promises

From The Hill's On the Money:
House Majority Leader Steny Hoyer (D-Md.) [has] vowed that extending the current tax brackets for the middle class would be the first order of business when Congress returns in November.

Lawmakers made a similar promise last year when they vowed to fix the estate tax before January ….
What if the lame-duck Congress fails to act on all the tax questions now left dangling in pre-election hot air? By one estimate, the cost to Americans next year could exceed $200 billion.


Jim Gust said...

I predict that they do nothing. After all, we'd be going back to the tax rates of Bill Clinton, and the country prospered then, didn't it?

The Bush tax cuts have been demonized as only for "the rich," when fully 80% of the benefit went to the "non-rich" as that term is defined by Democrats. If Republicans want to preserve the tax breaks for everyone, they have to do it now, they can't come back to it.

My compromise: Keep the current tax rates for capital gains and dividends. Adopt an immediate $5 million estate tax exemption. Allow the 36% and 36.9% brackets to return, but kick the threshold up by $50,000 each.

How to "pay for" this, that is, whose taxes should be increased? I've long advocated full taxation of the investment income of foundations and endowments for openers. Then I'd eliminate the favorable tax treatment of muni bonds--if ever there was a tax break only for the rich, that is it!

JLM said...

Love your compromise but doubt it can be "paid for." Endowments are still feeling poor, and below I have listed all the municipalities I can think of who are eager to pay higher interest rates on their bonds.

End of list.

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