Short-Term Gain, Long-Term Taxation Pain

By February 7, 2008Economy, Taxation

From the opening statement by Rep. Jim McCrery (R-LA), the ranking member of the House Ways and Means Committee, at a hearing today on the President’s Budget. McCrery is addressing Secretary of Treasury Henry Paulson:

Our short-term economic challenges shouldn’t completely obscure the need to pursue pro-growth policies that will pay dividends in the future. I therefore applaud you and the President for your long-term focus on economic growth and job creation and your recognition that preventing a looming tax increase is critical to that effort.

If we learned anything in 2007, it was that the majority’s allegiance to PayGo as it is constructed, demonstrated in their budget proposals, the Chairman’s tax reform proposal, and in the December debate over the AMT patch, has unfortunately set the cruise control for a $3.6 trillion tax increase over the next decade.

Unless we tap the brakes and shirk the yoke of this problem, the issue for Congress next year won’t be whether revenues as a share of GDP will climb, the issue will be whether the revenues will come from higher marginal rates, a return of the marriage penalty, higher taxes on capital gains and dividends, and smaller child tax credits or whether the Congress will find some other taxes to raise instead.

Don’t forget the death tax. It reaches 0 percent in 2010, and then kicks back up to 50 percent in 2011.

Secretary Paulson’s opening statement is here. A short statement from Chairman Rangel (D-NY) is here.

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