The New York Times
October 20, 2010
Several tax cuts are slated to expire at the end of the year, which means that the lame-duck Congress will face several tough decisions come November. To hear campaigning lawmakers tell it, however, the only tax issue out there is whether to extend the Bush-era tax cuts for the rich. The debate and the work can't end there.
Voters need to hear more about where their representatives stand on extending far more equitable, and economically sound, Obama-era tax cuts. Those cuts -- part of the 2009 stimulus law so reviled by the Republican Party -- are targeted on low- and middle-income Americans, constituencies all politicians vow to defend until it actually comes to doing it.
Consider the "Making Work Pay" tax credit. It has cut taxes by as much as $800 a year for couples making up to $150,000 and $400 annually for single taxpayers making up to $75,000. The extra cash has been delivered through reduced withholdings in each paycheck. Its objective is to temporarily support incomes in a downturn so there is no reason to permanently extend it. With the economy still in tough shape, a one-year extension makes sense.
Other Obama tax cuts due to expire include expanded tax credits for millions of low-income working families. Under the 2009 law, a family with two children and a single parent working full time at the minimum wage qualifies for annual child tax credits of $1,725. If that credit expires, the family would receive $248.
Current law also ensures that low-income working couples who are married keep more of their earned income credits, which help to ensure that employed people do not fall below the poverty line. Both of these credits foster work and stability and should be permanently extended.
President Obama's budget calls for making the bolstered credits permanent along with the Bush middle-class tax cuts. The Republicans insist that all of the Bush tax cuts be extended permanently -- including those for taxpayers making more than $250,000 a year -- but don't mention keeping the improved low-income tax credits.
The 10-year cost of the expanded low-income credits would be roughly $90 billion; extending the Bush middle-class tax cuts would cost $2.9 trillion. Extending the high-end Bush tax cuts would add another $700 billion, an unaffordable and unnecessary giveaway in the face of deep deficits.
The country needs a full debate on all the pending tax decisions -- the benefits and costs of each. If the politicians keep talking solely about tax cuts for the rich, whether for or against, everyone will be shortchanged.