Uncertainty Is As Toxic To Business Planning As Bad Policies

Yesterday’s Wall Street Journal‘s Washington Wire Blog reported on the game of chicken currently being played in Congress and with the White House on extending the current tax rates (I did not call them the Bush Tax Cuts because they are not tax cuts for anyone–they are simply an extension of the current tax rates).

According to the article, this is the basic battle:

“House and Senate Democrats kicked things off Thursday by declaring that they’ll bring legislation to the floor of the lame-duck session to extend the current tax rates for families earning less than $250,000 a year, but not for wealthier taxpayers.

“House Republican Leader and Speaker-in-Waiting John Boehner, in this week’s least surprising development, said Republicans will oppose any bill that fails to extend all the Bush tax cuts.”

Speaker-in-Waiting Boehner has stated, “The last thing our economy needs right now is a massive tax hike on families and small businesses — and that’s what the House Democratic leaders’ plan would mean.  We will oppose their job-killing tax hike and do everything we can to stop it.”  I hope he sticks to his guns, because he is right.  To split the extension of the tax rates according to income will allow Congress to lower that income ceiling in the future and will create a lot of problems for small business owners who file their business taxes as individual returns.

The Democrats are suggesting all sorts of policies including a deal that would extend all middle-class tax cuts, retain lower rates on dividends and capital gains, raise the threshold on the top rates from $250,000 to $1 million, and cut the corporate tax rate in half and suspend the payroll tax, both for employers and employees, for the first six months of 2011.

Why don’t they just extend the current tax rates and let people and businesses plan for the coming year?