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Debunking 5 Bush tax cut myths

Sorry to be a broken record on the soon-to-expire tax cuts that we got in 2001 and 2003 when Dubya was in office, but lots of folks seem fixated on the upcoming Dec. 31, 2010, deadline of late.

The most recent piece I've seen is from William G. Gale, senior fellow at the Brookings Institution and co-director of the Urban-Brookings Tax Policy Center. Gale debunks five myths about the Bush tax cuts in an article for the Washington Post.

I'll let you go there for details, but as a quick preview, here are the myths themselves:

  1. Extending the tax cuts would be a good way to stimulate the economy. 
  2. Allowing the high-income tax cuts to expire would hurt small businesses. 
  3. Making the tax cuts permanent will lead to long-term growth. 
  4. The Bush tax cuts are the main cause of the budget deficit.
  5. Continuing the tax cuts won't doom the long-term fiscal picture; entitlements are the real problem.

As  you can see, Gale's take on the cuts and what to do about them is probably going to upset folks who are for letting at least some of them expire, as well as those who want them made permanent, although pro-cut folks take a harder hit in this myth buster piece.

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property passed on to spouses gets essentially unlimited exemption from estate (not inheritance!) tax. they need to hire a financial planner to figure out best way to pass on property. rich folks have been avoiding this for years, so it's possible. less than 2 percent of all taxpayers end up paying an estate tax

Pamela Baggett

We really MUST NOT reinstate the inheritance tax. I have friends whose land has been in family for five or more generations. NO WAY they can afford the inheritance tax on this. How do they avoid this killer?

Clean Credit

I read the analysis and didn't see one thing supporting maintaining the tax cuts for the upper income folks. 25% of the deficit is a whopping price to pay for one of the least effective stimulants to the economy, particularly as it raises interest rates in general through causing more government debt to compete for investment funds. The net benefit to the economy was estimated to be negative. Seems like a slam dunk.

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