Monday, January 2, 2012
TAX POLICY 2012
Happy New Year!
It is obvious that temporary tax cuts, except possibly in response to natural disasters, are bad tax policy.
Bill Bischoff correctly points out in “Tax Literacy 202” (highlight is mine) -
“If all these breaks are really such great ideas, Congress should make them permanent. That would mean taking their true long-term cost into account for federal budgeting purposes instead of continuing to conceal the true cost by extending them for a year or two at a time. If Congress is unwilling to embrace honest accounting for the extenders, they should eliminate them.”
However as it now stands almost the entire Tax Code is temporary – with the extension through 2012 of the so-called “Bush” tax cuts.
What should (and I say must) be done is a total rewriting of the Tax Code – along the lines of the recommendations of the Bowles-Simpson report. To this end it is important that just about everything (except perhaps the payroll tax reduction) that has already expired, or will expire on 12/31/12, is temporarily extended through tax year 2014. And it is important that this be done early in 2012 so as to avoid confusion and uncertainty. The idiots in Congress must certainly not once again wait until December to pass extensions.
The idiots in Congress will not attempt to accomplish anything in 2012 (not that they accomplished anything in 2011), as it is a presidential election year. If there is to be any true tax reform the process will not even begin until 2013.
We know that the idiots in Congress are lazy. If the “Bush” tax cuts, and the extenders, are made permanent at this point then the fools will have no reason to seriously consider true tax reform, and will continue to put it off. So it is also important that the “Bush” tax cuts, and the currently temporary tax breaks, not be made permanent.
What do you think?