On Extending the Bush Tax Cuts

policy of tax cuts is not as daunting as it seems in May Obama administration. Tea party activists, along with conservative Republicans, are doubling down to congressional mid-term elections on the issues of federal spending and taxes. The most effective play for the Democrats here May well be a well-timed administration's reversal of policy embraced by the extension of Bush tax cuts. It makes sense from both a political and policy perspective.

Politically, this could take steam out of Republican / Tea Party story - that Obama is too liberal, socialist, wants an ever-expanding role of the federal government, and trying to "steal" our money through tax increases. a quick pivot to this question is now, the Republicans continue to pound for their recent opposition of small businesses incentives to create jobs, it can only be politically prescription needed to stave off defeat for Democrats in November.

In terms of politics, there is actually not much difference between the parties to extend the Bush tax cuts. Both Democratic and Republican tax plans to extend the Bush-era tax changes, including reducing tax rates for families with incomes of $ 250,000 or less, extending tax credits for children and students, reducing the marriage penalty and estate taxes, and changes in the alternative minimum tax (AMT), which are meant to remove the AMT penalty for many middle-income families. real difference between the parties concerns only the two highest tax brackets, limits on personal exemptions and itemized deductions, and treatment of long-term capital gains and dividends for families with incomes greater than $ 250,000.

Extending the Bush tax cuts will have beneficial effects to add more incentives and reduce uncertainty about taxes, and who could give a much needed boost struggling U.S. economy. Both Democratic and Republican parties will also plans to add the deficit. Current estimates by the Office of Management and Budget that the Democratic plan would cost $ 3.0 trillion in lost revenue over 10 years, while extending all the Bush tax cuts would result in 3.7 trillion U.S. dollars in lost revenue over 10 years. The difference of 700 billion U.S. dollars over ten years working at about 70 billion U.S. dollars every year. And the argument could be that the current sputtering economy may well react psychologically to the idea of ​​expansion of all cuts. It has resulted in increasing growth in the short term could have the effect of reducing the final total lost revenue. Limiting the extension of Bush tax cuts on only two or three years will also reduce long-term impact on the national debt. In both political and policy sense, embracing the Bush-era tax cuts makes good political sense for Mr. Obama and the Democrats.