Tuesday, September 14, 2010

A Couple of Points re Obama’s Tax Proposal

A couple things that I don't think have been covered sufficiently, either because they're too subtle for the day-to-day news cycle or because Obama has failed to communicate them; probably some of both.

1. The so-called “Bush Tax Cuts,” as enacted, are scheduled to expire on December 31, 2010. That was the law that President Bush pushed for and signed. He may have wanted and expected the tax cuts to be made permanent at some point, but that's really neither here nor there. You don't get credit for good intentions, or you shouldn't, anyway. If people (with incomes less than $250,000) are paying the same marginal tax rate in 2011 that they did in 2010, that's Obama's doing, not Bush’s. I suppose it's too much to request that such a policy be referred to as the “Obama tax cut;” anyway when even Democratic partisans fail to do so it’s probably not gonna happen.

2. The phrase “allow the tax cuts to expire for those making more than $250,000” makes it sound like people with income in that range are going to lose the entirety of their Bush-era tax cuts. Not so! It just means that they’ll no longer pay the lower Bush-era rates on the dollars above $250,000. Dollars 1 through 250,000 will still be taxed at the lower rates, which means that if Obama follows through on his campaign promise, this cohort will still get a substantial tax cut. Smaller than the tax cut that Bush gave them, sure, but larger than the zero tax cut they’d have if Obama does nothing.

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