The Bush tax cuts are about to expire, raising the horrifying prospect of a tax hike while the economy is weak.The GOP wants to make the tax cuts permanent. Obama is hoping to make the middle-class tax cuts permanent, but revert those on the rich back to the pre-Bush era. Another possibility that Obama might favour is a permanent extension of the middle class tax cuts, and a temporary extension of the ones for the rich.
The GOP should hold out, and either insist that Obama cave for the rich, or let them all expire.
Here’s why that’s good politics:
The first scenario) If the tax cuts for the rich become somehow disconnected from those of the middle class, then they’ll drift higher over time. From a low-taxes standpoint, they need to be kept together.
The second scenario) If taxes on the middle class are raised, no matter who is really to blame, Obama will get the blame. This is how politics work = every time there’s a tax issue, it hurts Democrats and helps Republicans. End of story. Heck, Obama cut taxes during the stimulus, and yet people think he hiked taxes. If Democrats think they an pin a tax hike to the GOP, they’re deluded.
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