Congress has not yet reached agreement on whether or not to extend the current tax rates (the extension being debated is not a tax cut for anyone–it is merely a continuation of the current tax rates).
Paul Mirengoff at Power Line posted an article yesterday about some aspects of the debate. The article points out:
“According to Continetti (Matthew Continetti of the Weekly Standard), the current Democratic strategy is to extend current middle class tax rates “permanently” while setting an expiration for upper-income rates. From the Democrats’ perspective, this approach makes plenty of sense. Raising taxes on the “rich,” which includes small businesses, is politically dangerous now, while the economy stagnates. The Dems likely would be far better off trying to soak the “rich” later on when (1) the issue is no longer coupled with tax rates for the those who make less than $250,000 and (2) the economy, one hopes, has improved.”
Decoupling the tax rates of those who make more than $250,000 from those who make less than $250,000 is a really bad idea. (Just in case anyone assumes that I have a personal interest in this, I am not in danger of making $250,000 a year). Unfortunately, inflation happens. It will probably take at least ten years, but we will reach a point where $250,000 is middle class. At that point the majority of Americans will be paying a higher tax rate than they imagined.
The article also points out:
“But the biggest risk would be incurred by President Obama. He still “owns” the economy in the public’s view. It would, I think, be astonishingly stupid if, in Continettit’s words, “the same team that brought you Obamacare [were to] produce, through its inaction, the largest tax increase in history.””
John Hinderaker at Power Line also points out that the Democrats in recent years, for reasons unknown, have become the party of the wealthy. To raise taxes on the wealthy might easily cost the Democrats that demographic.
It will be interesting to see if the Democrat-controlled Congress will deal with the extension of the current tax rates in the lame-duck session or if they will let the Republicans deal with it in January.