Bush Tax Cuts for the Wealthy: Options
September 12, 2010 Leave a comment
I assume that some (or many) people in Coral Gables would favor continuing the Bush tax cuts for all income groups, given income levels here. Here is a different approach explained by Brad deLong (who we would call) a liberal economist.
It is necessary to appreciate that a continuation of the tax cut will increase the deficit because the tax cuts were programmed to expire at the end of this year. The impact of approving new tax cuts would be a deficit increase of $700 billion. The solution–use the monies from the tax increase for the rich for job promotion (stimulus) programs.
You would get a smart policy for addressing the current short-term jobs deficit and also make a down payment on the long-term budget deficit if you did the following: Extend the middle-class tax cuts for a few years, let the top-rate cuts expire on schedule at the end of December, and use the revenue gains in the first year or so to pay for effective job-creating stimulus. The middle-class tax cuts and the stimulus measures both would end once the economic recovery becomes more sure-footed. The deficit reduction from ending the tax cuts would be permanent.