It’s clear by now that the budget talks are drifting in a drearily familiar Washington direction: Tax and spending increases now, in return for the promise of spending cuts and tax and entitlement reform later. This is a bad deal for everyone except the politicians who want more money to spend.
Consider the tax increase now being touted as a sign of “compromise.” Speaker John Boehner has moved from opposing higher tax rates to offering higher rates for incomes above $1 million a year. While that’s better than the scheduled increase on incomes above $200,000 a year (for singles), it would still put the GOP on record as endorsing a tax increase, in particular on small businesses that file individual returns.
President Obama has countered with a ceiling of $400,000. If they compromise at $500,000, we are all supposed to thank the two sides for their reasonableness. Yet both parties will have declared that raising tax rates is no big economic deal. This will hurt the economy, and it further advances Mr. Obama’s political goal of separating the middle class from the affluent on tax policy.