September 18, 2010 Leave a comment
Slate’s Daniel Gross has a nice column on extending Bush’s tax cuts. My favorite parts:
1) All the representatives and senators who voted for the tax cuts in 2001 and 2003 also voted for their expiration. That’s how they were designed.
2) The tax cuts could have been made permanent or extended at some point before now…
4) The bold and confident assertions made about the links between tax rates and economic growth, market performance, and prosperity are almost certainly wrong. Turn on CNBC or look at the Wall Street Journal op-ed page these days, and you’ll learn that we must keep tax rates on capital gains, dividends, and income precisely where they are because shifting them to different levels will retard economic growth. Keep this in mind: The people who designed the current, unsustainable tax system promised us that lower marginal rates, and lower taxes on capital and dividends, would boost the economy, promote investment, create jobs, spur market performance, and raise everybody’s income. They were wrong…As I’ve pointed out, the years under the current tax regime have been a lost decade. Pick your metric—median income, employment, stock market returns, economic growth—the low-tax ’00s sucked. Yet proponents of keeping the tax cuts persist in making the argument: To avoid a repeat of the past decade, we must have the exact same tax policies as we did for the past decade.
On a related point, Jon Chait, has a nice little summary of his theory on Republican support for perpetual tax cuts:
My theory, which I explain at more length in my book, is that you have a tiny group of supply-side true believers. Then you have a larger group of rich people who benefit from regressive tax cuts. This coterie has managed to grab the reins of the right-wing policy apparatus and spew an endless stream of propaganda supporting those policies. Meanwhile, most people have very little understanding of economic and fiscal policy, so it’s easy to convince anybody with a general predilection for small government that regressive, debt-financed tax cuts are advancing the small government cause.
Sounds about right to me. You can be quite successful in American politics by taking advantage of the general ignorance– especially on economic matters– of the American people.