Tax cuts task force to hammer out deal
Wednesday, December 01, 2010
Sure there's talk of Congressional votes this week on the expiring Bush tax cuts. But even if they happen, the tallies will be for show only.
The way the system works, we're destined for gridlock unless …
"Hey, I know! Let's appoint yet another panel to come up with a compromise on the tax cuts that will keep taxpayers off both Democrat and Republican backs for at least a little while," said the prez.
OK, Obama didn't actually say that. But it's pretty clear that's what he was thinking Tuesday when he appointed a bipartisan panel to come up with a fiscally and politically passable solution to the tax cuts impasse.
Oh joy! More talking about how to fix problems instead of just fixing them.
I scoff, but I must admit that the reality of Washington, as it is in the private sector, too, is that a small group tends to do the heavy lifting and work out a deal. Then comes the really hard part: Selling it to everyone else, be it Congressional colleagues or a corporate board.
And the members are…: A-listers, as least by D.C. standards, were assigned to the new tax cuts tax force, which held its first meeting yesterday afternoon.
Treasury Secretary Timothy F. Geithner and White House budget director Jacob Lew, at center and far right, respectively, in the photo below, are the White House reps.
For the Democrats, we have Sen. Max Baucus of Montana, chair of the Senate Finance Committee, and Rep. Chris Van Hollen of Maryland, who now serves on the Oversight and Government Reform Committee and in the 112th Congress will be ranking member on the Budget Committee.
Republicans are represented by Sen. Jon Kyl of Arizona, who's the Senate Republican leader, and Rep. Dave Camp of Michigan, the top Republican on the tax-writing Ways and Means Committee.
Looking for agreement: Wonk glamour factor aside, these guys have their work cut out for them.
Republicans are holding firm for full extension at all income levels of the expiring tax cuts. Most congressional Democrats want the rates to expire, that is, go up, for folks with household income of more than $250,000.
But time is running out.
And the party that wants to limit the tax cuts lost a lot of seats in the midterm election. Even the White House knows that it will have to give in here. The question then becomes how much?
The mostly likely scenario is full, but temporary, extension of all of the 2001and 2003 tax laws (except for the estate tax, but that's a topic for another blog post).
If I were a betting person, I'd place my money on a two-year extension of current tax rates so we can go through all this fun again during the next election cycle, which already has begun.
Taxing millionaires: But another compromise is getting some attention of late. Some folks are considering a millionaires' tax.
Now these are dirty words in state legislatures. Still, several states in recent years have passed higher tax rates for their wealthiest citizens.
And Uncle Sam has noticed. In fact, a tax on the country's very top earners was part of the health care reform discussion earlier this year.
Now the idea has resurfaced, with talk of the Bush tax cuts being extended only for folks who make less than $1 million.
Advocates of taxing those who make more than $1 million say it would make the tax system even more progressive. Plus, they argue, it would protect those who make high incomes but live in high cost areas where their earnings don't necessarily translate as rich.
The downside is that even if millionaires are taxed more, continued lower taxes on folks earning between $250,000 and a million a year would still produce a budget hole that would have to be filled somehow.
Yep, the new tax cuts task force has a tough job ahead of it.
But the effort to get at least a few folks from both sides of the aisle talking about the issue is a step in the right direction.
Just walk fast, guys. Time is running out.
- Effect of expiring tax cuts on the rich
- Democrat vs. Republican tax cut graphics
- Tax cuts favor ...
- Taxes, wealth and relativity
- Democrats who support Bush tax cuts
- Representing the rich ... or not
- Could a 'big spender' surtax pay off?
- Tax the rich, whoever they are
- California millionaires' tax is legal
- State taxes on the rise
- 10 states with highest income tax rates
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