aTypical Joe: a gay New Yorker living in the rural South

Wednesday, December 28, 2005

Reverse Robin Hood

Cut taxes for the rich. Cut programs for the poor. From the Center on Budget and Policy Priorities:

Sometime early next year, the House of Representatives is expected to vote on the budget reconciliation legislation that the Senate passed on December 21 and the House passed in a slightly different version on December 19. That legislation would make significant cuts in a number of programs serving low- and moderate-income families and individuals, including Medicaid, child support enforcement, and student loans.

Supporters of the legislation defend the cuts as “tough choices” that need to be made because of large and growing budget deficits. These claims are undercut by the fact that, in the last six weeks, the House has passed four tax-cut bills that together cost more than twice what the budget reconciliation bill saves. The claims are further undermined by Congress’s unwillingness to rethink any previously enacted tax cuts as part of its supposed reevaluation of priorities in light of deficits.

In particular, Congress has chosen to allow two tax cuts that exclusively benefit high-income households - primarily millionaires - to begin taking effect on January 1, 2006. By 2010, these tax cuts will eliminate two current provisions of the tax code that limit the value of the personal exemptions and itemized deductions that people at high income levels can take.

It’s not too late to change course:

Congress is expected to act early in 2006 on other tax measures that expired at the end of 2005, for instance extending relief from the Alternative Minimum Tax.  Just as Congress can still enact these other tax changes in January or February and make them retroactive to January 1 without creating significant tax compliance and administration problems, it could still rescind the two tax cuts after the start of the new year.  If Congress acts expeditiously, the change could be made well before tax forms have been generated and before significant estimated payments have been made.

Congress could use the funds saved by this step either to eliminate the low-income cuts in the reconciliation package or to reduce the deficit.  Either approach would represent a distinct policy improvement.

Via Angry Bear.