The Atlantic’s Megan McArdle has written another post about our comparison over the next 75 years of the Social Security shortfall and the cost of the Bush-era tax cuts for high-income taxpayers. The gist of Ms. McArdle’s argument seems to be that we’re not computing the present value of these two policies in the same way. That’s simply incorrect.
BEYOND THE NUMBERS
In today’s Wall Street Journal, Robert Rubin and Julian Robertson make some compelling arguments for restoring the federal estate tax (in “Bring Back the Estate Tax Now”).
Today we sat down with Chuck Marr, Director of Federal Tax Policy at the Center, to discuss the debate about taxes that will take center stage when Congress returns after Labor Day.
Kathy Ruffing and I recently noted that the cost of extending the Bush-era tax cuts for upper-income taxpayers roughly equals the amount of Social Security’s 75-year shortfall. Today at The Atlantic, Megan McArdle questions both our estimate and our analysis. Here’s why our comparison makes sense.
Robert Greenstein, the Center’s executive director, and John Podesta, president and CEO of the Center for American Progress, explain why President Bush’s tax cuts for the wealthy should expire on schedule in December in this op-ed published in the Financial Times:
UPDATE, SEPTEMBER 30: We’ve revised some of the figures in this post. Click here for the updated numbers.
As I’ve said before, from the standpoint of economic efficiency there’s a clear-cut case for letting the Bush tax cuts for people over $250,000 expire on schedule in December. Sunsetting the high-income tax cuts makes just as much sense from the standpoint of equity. Recent data from the Congressional Budget Office (CBO) show a stunning shift in income away from the middle class and towards the highest-income people in the country over the last three decades:
Today's lead editorial in the Washington Post warns that a recent Senate vote on extending all of the Bush tax cuts is a "chilling sign of what a number of lawmakers believe passes for fiscal responsibility."
Rep. Paul Ryan and his budget plan are getting a lot of respectful attention in the press. (See here and here.) New York Times columnist Matt Bai suggests Ryan’s plan might represent “the starting point in what could be a serious negotiation about entitlements and spending.” But a careful look at the plan shows it to be a radical blueprint to shift massive resources from the broad majority of Americans to the very wealthy, while leaving the budget on an unsustainable course for decades.
Who stands to gain the most if Congress extends the middle-class Bush tax cuts: a middle-income worker or a millionaire? The millionaire (see graph). That’s one more reason — on top of those listed here — why Congress shouldn’t add a trillion dollars in deficits and debt over the next decade by also extending the tax cuts exclusively for the richest 2 percent of families.
The Heritage Foundation’s Brian Riedl continues to defend his claim that the Bush tax cuts aren’t a major contributor to current and future deficits. Our analysis shows otherwise.