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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: longnshort who wrote (287498)	5/10/2006 3:31:49 PM
From: TigerPaw	Read Replies (1) \| Respond to of 1571973

Bush Jr. is setting up the largest tax increase in history, only it will be applied to the next generation. Poor them. TP

To: longnshort who wrote (287498)	5/13/2006 3:44:01 PM
From: tejek	Read Replies (1) \| Respond to of 1571973

"All the temporary tax provisions are due to expire by the end of 2010. By then, there will be a new president in the White House and, in the view of many critics of the Bush administration, the fiscal situation will be so dire that Congress will have little choice but to let the tax cuts lapse." 'Temporary' Tax Cuts Have a Way of Becoming Permanent By ANNA BERNASEK Published: May 14, 2006 THINGS that seem temporary can have a sneaky way of becoming permanent. Anyone who's ever bought a home knows how it works. At first there are dozens of fixes you plan to make — that dreadful carpet, those dingy tiles in the bathroom, maybe even a silly door knob. Ten years later, you find yourself still staring at them. Graphic: $1.6 Trillion in Tax Breaks The same may turn out to be true for the Bush administration's tax policies. Passed between 2001 and 2004, the president's major tax policy initiatives were approved on a temporary basis. Of the many changes that were made law, almost every one came with an expiration date, also known as a sunset provision. Many of the deadlines on these measures have already been extended, some as recently as this week. For others with deadlines later in the decade the lobbying is just getting underway. But as the budget turns a deeper shade of red, it's worth assessing those sunsets once again. They don't make a pretty picture. Recall the basic tax policies of the Bush presidency: sweeping cuts to income and estate taxes, benefits for families and married couples and tax breaks for savers, investors and students. More than 20 major provisions were enacted, with seemingly countless detailed changes to the tax code. The laws phase in different tax rates at different times and end at various dates through 2010, resulting in a shifting kaleidoscope of tax calculations. So far, very few provisions have been allowed to expire. For instance, only one of the major provisions — the additional depreciation allowance for business property — has gone away. That was arguably the only provision that was really intended as a short-term fix, to bolster business investment. The others that neared expiration have been extended and now feature new sunset dates. Increased alternative minimum tax exemptions, for example, have been extended each year since 2004, and this week Congress voted to extend the provision again for another year. In addition, Congress also approved a two-year extension of some provisions dear to investors, like cuts in capital gain and dividend taxes, which had been due to expire at the end of 2008. Each year since 2001 Mr. Bush has proposed making his core tax policies permanent. The most significant items include repealing the estate tax and perpetuating the cuts in individual income, capital gains and dividend taxes. The congressional Joint Committee on Taxation recently calculated that it would cost $1.6 trillion from 2006 to 2016 to make the tax provisions permanent. And that's in addition to the $1.3 trillion cost of the 2001 tax package and $350 billion for the 2003 package, according to the committee. All the temporary tax provisions are due to expire by the end of 2010. By then, there will be a new president in the White House and, in the view of many critics of the Bush administration, the fiscal situation will be so dire that Congress will have little choice but to let the tax cuts lapse. "There's no way Congress will make these tax cuts permanent," said Laurence J. Kotlikoff, chairman of the economics department at Boston University and co-author of "The Coming Generational Storm." "Every year it doesn't happen it's less and less likely." Leonard Burman, a tax expert at the Urban Institute, a research group based in Washington, agrees. "By 2010, people are going to be disgusted and won't pass the tax cuts," he said. Congress's failure to address budget imbalances in recent years has already led to a significant fiscal reversal. In January 2001, the Congressional Budget Office predicted an accumulated surplus in the budget of $5.6 trillion for 2002 to 2011. Now it predicts a deficit of $2.7 trillion over the same period. And that's before any of the federal government's massive Social Security and Medicare obligations are taken into account. Three economists, Alan J. Auerbach from the University of California, Berkeley, with William G. Gale and Peter R. Orszag from the Brookings Institution, have analyzed the latest budget trends and found that diminishing revenues are the main reason for the government's worsening fiscal position. They attributed 58 percent of the decline in official budget forecasts since 2001 to lower revenues mainly resulting from the tax cuts, and 42 percent to higher spending. At the same time, they note that declining revenues have accounted for most of the deterioration in the actual budget outcomes between 2000 and 2006 and revenues have recently been near historic lows as a share of gross domestic product. 1 2 Next Page » nytimes.com