Don't Let the Bush Tax Cuts Expire Now

Outrage about the Bush tax cut deal is leading some to suggest the Democrats should pursue tax increases for the rich, at the risk of letting the whole law expire.

This argument needs to take into consideration what 1999-era tax rates would actually mean for average Americans today, in a weak economy.

Here's the clearest way to see the effect of the Bush tax cuts at all income levels. This graph from the Washington Post shows the average tax cut under the White House plan (extend most of the law, and raise only the top rates for the top earners) versus the Republican plan (extend the full law period):

Upshot: The rich get much more from the Bush tax cut than the poor (according to the Tax Policy Center, the top 20 percent sees about three-quarters of the tax cut). But without the extension, folks making $50,000 would see their after-tax income drop $1,000 next year. Who thinks that would increase buying, confidence, and economic growth in 2011?