Taxes to rise unless Obama cuts extended
Most of those cuts where put in place specifically for a year or two, and intended to last only for that period. And a large part of the cuts was more like spending through the tax system than real cuts. (Targeted credits, even targeted refundable credits, rather than cuts in rates.) Both unlike the Bush tax cuts, which did include credits, but cut rates for all broad groups of federal income tax payers, and which where put in place for 10 years, and would have been for longer if they could have gotten that through congress when the bills initially passed, or as an extension later. After 10 years everyone has gotten used to the lower rates, letting the taxes go back up not only is technically a tax increase, it will be experienced as such. After 1 year? Maybe, maybe not.
Most Americans don't even realize their taxes went down since Obama became president.
Maybe not if they where heavy smokers.
During the Bush era, Congress tried to stimulate the economy by sending most Americans a one-time check. But rather than spending it, many people saved their payment or used it to pay down debt and its impact was muted.
I wasn't a big fan of that effort. But not for that reason. It doesn't bother me if people save it or use it to pay down debt, but such a one off refundable credit, is essentially spending through the tax system. It doesn't provide any useful supply side effects, or reduce the disincentives and distortions of the tax code. Then later on you need to increase rates (since spending was not controlled) and so you increase future disincentives and distortions. In this Bush was somewhat like Obama (as they both where in their lack of discipline in terms of spending).
The college tax credits probably drive up college costs.
The child credit may make some tiny bit of sense, in terms of contributions to keeping up fertility to avoid the demographic problems of Europe and Japan, but they probably have minimal effect on that, I'd be fine with the additional credits also going away. I'd even be ok with the whole idea being scrapped as part of a comprehensive rewrite of the tax code, which left almost no credits, and fewer deductions, but which lowered rates.
I'm tired of the one time credits. If tax levels are to be kept the same as if "the Obama cuts" where maintained, it should be done so through cutting (or maintaining) the rates, not through extended or additional one time or short term credits. Ideally have major reform and simplification (which I know you have posted in support of before), but failing that at least roll back some of the recent complexity in a revenue neutral way (or instead of increasing other taxes, or other elements of the federal personal income tax). |
