The White House has just released a report on the negative economic impact of a hike in tax rates for the middle class.And there’s a lot of good stuff in the report, about how a failure to prevent the across-the-board tax hikes on January 1 would sap consumer spending and slam a range of industries.
But there’s one big thing that gets totally left out…
First, here specifically are the President’s proposals:
Under the President’s proposal, the 98 per cent of American families with incomes of less than $250,000 per year would continue to benefit in full from the income tax cuts expiring at the end of 2012, including:
— The doubling of the Child Tax Credit to $1,000 per child, and the extension of the credit to millions of
working families that previously could not benefit from it.
— The 10 per cent tax bracket, which will provide middle-class couples with a tax cut of up to $890 next year.
— Marriage penalty relief, which reduces or eliminates marriage penalties for nearly 38 million couples.
— Lower tax rates on up to $250,000 of income ($200,000 for single filers).
— Under the President’s plan, the income tax rates for high-income households would return to what they were under President Clinton, when the economy created nearly 23 million new jobs, we went from deficit to surplus, and businesses and investors did very well.
So what’s missing?
There’s no mention of The Payroll Tax Holiday, which was agreed to in 2010, and which reduced workers contributions from 6.2% to 4.2%, and which is due to expire in 2013.
For the average family, it works out to $40 each pay period (Nomura), and it’s worth about $126 billion to the economy (Goldman).
With the economy still weak it makes plenty of sense to keep the holiday going longer, but The White House’s new release makes clear that it’s not really on the table.
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