A Smart Argument Against the Tax Cut Compromise

More

It's harsh -- maybe too harsh -- but it's smart. Howard Gleckman, whom I overwhelmingly trust on all tax policy questions, says the president's Bush tax cut deal "isn't stimulus, and it isn't smart."

By my rough calculations, more than half --at least $450 billion--will do little or nothing to boost the economy in the short run. It won't increase demand for goods and services. It won't increase investment. And it certainly won't create many new jobs. It will, however, provide a fabulously generous tax windfall to those who need it least.

Would you, for instance, try to boost short-term growth by giving a few thousand super-rich estates a $70 billion tax cut? Or by continuing $55 billion in mostly dubious special interest tax breaks for NASCAR race track owners, Manhattan real estate developers, ethanol producers, and other worthies? How about giving $27 billion in tax cuts to married people for being married? Or slashing payroll taxes for all workers, including those making hundreds of thousands of dollars a year? The entire payroll tax cut will increase the national debt by $100 billion, and more than $3 billion will go to those making $500,000 or more (who get an average of more than $2,600 each).

That's not to say the deal is all bad. I would include some bits in a serious stimulus bill. For instance, I would use low-income tax credits such as those in the 2009 stimulus bill to put cash in the pockets of people most likely to spend it. I'd also keep tax rates relatively low, especially for low- and middle-income families. But those provisions account for perhaps one-third of that $858 billion.

Read the full story at TaxVox.

Jump to comments
Presented by

Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

Get Today's Top Stories in Your Inbox (preview)

CrossFit Versus Yoga: Choose a Side

How a workout becomes a social identity


Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus

Video

CrossFit Versus Yoga: Choose a Side

How a workout becomes a social identity

Video

Is Technology Making Us Better Storytellers?

The minds behind House of Cards and The Moth weigh in.

Video

A Short Film That Skewers Hollywood

A studio executive concocts an animated blockbuster. Who cares about the story?

Video

In Online Dating, Everyone's a Little Bit Racist

The co-founder of OKCupid shares findings from his analysis of millions of users' data.

Video

What Is a Sandwich?

We're overthinking sandwiches, so you don't have to.

Video

Let's Talk About Not Smoking

Why does smoking maintain its allure? James Hamblin seeks the wisdom of a cool person.

Writers

Up
Down

More in Business

Just In