The Sunset on Bush’s Tax Deferral Draws Near
Mallory Factor sounds the alarm bells:
Unless congressional Republicans aggressively focus on extending expiring tax cuts, taxpayers will soon enough be facing the biggest tax hike in American history. Recall the history here: When President Bush’s first tax cuts were enacted in 2001, the president had to agree to a sunset clause providing that, unless extended, the tax cuts would expire at the end of 2010. This unfortunate provision nevertheless helped secure enactment of the tax bill by making the fiscal impact of the tax cuts on the budget seem smaller than it would otherwise have been counted under congressional rules.
The fiscal impact of the past six years has been rather massive in terms of the size of the General Fund deficit. Which means we never cut taxes – we only deferred them. But this is not the only thing Mr. Factor gets wrong:
But the impact of this massive tax hike on the economy would be severe, and could inevitably lead to an economic slowdown.
Right. Don’t you recall the massive recession that followed the 1993 tax increase? If you do, I don’t seem to. Mr. Factor then goes on to say certain Democrats have it all backwards:
The Democrats have it exactly backward: Tax cuts should be the impetus for entitlement reform rather than an excuse to avoid it or expand the government.
“Entitlement reform” is really a reduction in the Social Security benefits that folks have been paying for in the form of higher payroll “contributions” over the past generation. Mr. Factor is actually advocating a backdoor employment tax increase. But what else is new?