Cubachi also points to criticism from Jimmie at the Sundries Shack who thinks the GOP’s tax deal isn’t a very good for us or the economy:Conservatives, tea partiers, and republicans have worked diligently and effectively to give the republican party its larget house win in years. We now get an extension of the Bush tax cuts for two years, and funemployment… I mean unemployment checks for 13 months. So the unemployed will have more fun collecting money from those of us in the productive sector. Has the republican leadership in the House put up a fight?
Representative Michele Bachmann and Senator Jim DeMint have voiced their concerns about this deal, while DeMint has come outright against the deal.
The overall thought is that there was no chance that Republicans could make the current tax rates permanent, and they managed to extract a couple smaller temporary cuts such as a one year payroll tax holiday of 2 percent out of a clearly unwilling President. They get a tailor-made issue to use in 2012 and we get a little tax cut.Jimmie then goes on to point out several problems with the tax cut compromise. I'm going to highlight only the two (of four) that I want to comment on:
...the paltry one-year, two-percent cut to individual payroll taxes (businesses will still have to pay the full 6.2 percent) is essentially another stimulus check. The only difference is that this money is coming out of the Social Security system, which is already running wildly out of control.
As Ace of Spades pointed out, the White House has said:
[...] The tax cut legislation would provide for a transfer of General Revenues to the Social Security Trust Fund, ensuring no negative impact on Social Security solvency.[...]
Got that? Instead of using Social Security funds to feather bed the General Revenue account as has been done since LBJ, money's going to flow in the other direction. I believe this is the first time that we are planning for general revenue money to be moved to move the non-existent "trust fund". Perhaps this will be the beginning of the realization that Social Security is an unsustainable Ponzi scheme.
The other point that Jimmie makes and I want to comment on is:
...the tax rates will stay put for two years. In the short term that’s a good thing. But for a small business owner, or any business owner for that matter, the uncertainty over how much much money they’ll have to hire employees hasn’t really changed.I think he over plays the uncertainty issue. The only way that there would now be certainty is if Congress had acted with enough time for businesses to adjust their end of year planning. Because we're running out of time for a compromise right now, uncertainty is at the forefront of everyone's mind; however, this is because Congress chose not to act last spring or summer. In fact, I've already opined about the perversion of incentives that uncertainty creates. It is an issue.
And the idea that there would be certainty if the tax cuts were "permanent" ignores the fact that tax rates have changed often over the years. The expiration of a tax agreement functions more as a scheduling tool for tax discussions which most politicians want to defer. The mistake this time around was deferring them as late as Congress has. I personally think that a two or four year expiration on tax cuts is a feature, but I'll grant that business owners would be better able to plan if that expiration occurred when no new tax legislation is passed six months prior to the actual expiration date. In other words, force Congress to act (or not) in June.
The reason I like the sunset provision is that it requires Congress to reconsider what our tax policy should be. I think there's value in simply having that discussion periodically. From a political stand point, there's value in scheduling tax rate reviews because it's (usually) a winning issue for conservatives, but there are process advantages as well. Tax debates are inevitably contentious; therefore, they take time away from all the liberty crushing bills our betters in DC would rather be working on. But there's also non-political, non-partisan value in the country contemplating and then affirming what our tax policy will be for the next few years.
I see a lot of value in sunsetting the federal code. In fact, I'd like to see (more or less) all laws sunset for the same reasons mentioned above. If you think this is unreasonable, you need to consider the fact that not doing this means that the body of rules, regulations, and legislation that we have will continue to snowball out of control. Obviously, a four year review is unreasonable for reviewing everything (I'm thinking 20 or so years) and such reviews would have to be staggered so the work was evenly distributed over time.