Economists Warn Of Consequences If Cuts Not Extended
September 22, 2010 Wednesday
By Katy O'Donnell
More than 300 economists are sending Congress a letter today in support of extending the 2001 and 2003 income tax cuts for all taxpayers "in order to prevent a devastating blow to America's fragile economic recovery."
The letter, sent under the auspices of the National Taxpayers Union, features economists from a wide range of colleges and research centers throughout the country, in addition to experts from conservative groups such as the American Enterprise Institute and the Reason Foundation.
The Bush tax cuts, set to expire at the end of this year, have become a hot-button issue for the midterm elections, dominated by voter anger over both a weak economy and burgeoning deficits.
The economists call failure to extend the cuts an "anti-stimulus," asserting that allowing marginal tax rates to rise would place "heavier burdens on the working class and wealthy alike" and handicap an already tentative economic recovery. The letter also demands legislation to keep the estate tax from returning next year at a 55 percent top rate, which would happen if Congress takes no action.
The letter warns that "even confining tax hikes to wealthier individuals will have deleterious effects, as households earning more than $210,000 account for one of every three dollars in consumer outlays."
The plea also factors in one issue rarely raised in the current tax cut debate: the time Americans expend simply complying with an already tedious, paperwork-heavy code, pegged at 2.4 billion hours for individual taxpayers this year by the National Taxpayers Union. The letter declares that "this loss of time and associated costs (estimated at more than $100 billion) would only be made worse" by Obama's proposals on the estate tax, limitations on itemized deductions, and phasing out personal exemptions.
Meanwhile, the liberal policy group Citizens for Tax Justice tried to counter a letter toSpeaker Pelosi signed by 31 House Democrats who called for an extension of all the Bush tax cuts. In a release, the group challenges the letter's claim that the taxpayers who would lose their cuts under Obama's plan "are responsible for 25 percent of national consumer spending." These taxpayers' share of pretax income, the group asserts, is only 21 percent, and much of that is saved, not spent. In other words, the math "doesn't really pan out," according to Steve Wamhoff, legislative director of CTJ, who said he hopes the group's report causes some of those Democrats to change their position.