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Obama-GOP Tax Cut: Deal or No Deal?

December 13, 2010

A week ago, President Obama announced the outline of a tax deal between the White House and Congressional Republicans. Since then the deal has received mixed reviews on the conservative side and universal opprobrium from the left.

Again: allowing you to keep more of your own money is not a benefit to be granted or taken away by the federal government. Those on the left have the idea that everything you make is owned by the state and they allow you to keep some of it. That is, if they don’t need it for their redistributive plans.

With that in mind, the broad outlines of the plan are:

  • Individual Tax Rates remain the same for all
  • AMT remains the same
  • Capital Gains rates remain the Same
  • Estate Taxes go up to 35% for some ($5 million exemption)
  • Only good for two years
  • Unemployment Benefits extended
  • $200 billion in Stimulus spending
  • Dozens of Earmarks for special interests

The first three items are what we wanted and if the deal had stopped there, it would be fine. Estate taxes are greater than zero for some and that’s a new tax that we do not want. That alone should give pause. Extending unemployment benefits is bad policy, as I wrote last week. More stimulus spending and additional earmarks go over the line.

What the federal government continues to do is to raise spending first and use the deficit as justification for needing more revenue. We should not be fooled again: Washington’s appetite for spending always exceeds the resources they are given.

What’s the rush? We can do better in January when the new Congress we just elected is sworn in. A poll by the South Florida Tea Party shows 60% agree with that idea and only 15% think we need to make a deal now. Maybe we’ll get lucky and the left will be so outraged that they will not pass the agreement. Democrats as The Party of No–wouldn’t that be fun?

On the other hand, if it is pass ed, will Obama or any other Democrat be running in 2012 on a platform of raising taxes? I can see it now: “Vote Democrat and we’ll raise the taxes we failed to in 2010.”

Good luck with that.

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