Bush Tax Cuts to be Extended

Businesses and individuals can finally start to settle in and make plans for the next two years. It looks as though the Bush-tax cuts will rightfully be extended until 2012, though certain distasteful elements have crept back into the tax code, i.e. the death tax will return next year at 35% on estates valued at over $5 million.

The deal gives the GOP pretty much everything it was asking for. In return, the GOP has agreed to support an extension of unemployment benefits for the long-term unemployed. That’s a small price to pay for some certainty in the business climate, though at some point those on the dole will have to tread water on their own. The problem for the deal may be that the president has stepped so far to the right in giving the GOP what it wants, that Democrats may put up serious obstacles to passage of the bill. That would be unfortunate, to say the least.

After the dust clears it will be incumbent upon the new Congress to junk this lame tax code and replace it with a simple plan that A) has every American pay at least a little, B) includes the lowest corporate income tax in the world, C) has no tax on dividends and interest, D) does not include the immoral and unjustifiable estate tax that rips apart families, especially family farms.

Of course any reduction in taxes must come after a reduction in spending. Without the appropriate reductions in spending, the borrowing will continue. The best way to curb spending is to stick to only constitutionally mandated spending. To do that Congress should pass John Shadegg’s HR450, the Enumerated Powers Act. HR450 forces Congress to provide constitutional justification for every bill it writes and passes. Do that, and the road to spending taxpayer dollars becomes much longer.

But the problems with the enumerated powers don’t lie solely on the Democratic side of the aisle, as can be seen by the GOP’s willingness to deal on unemployment benefits. W. James Antle, III writes at The American Spectator:

For decades, the federal government has ignored the non-procedural parts of the Constitution. Instead of treating it as something that limits the government’s power, the Constitution has been reduced to Robert’s Rules of Order. Even many of the Republicans who speak loudest about “constitutional conservatism” will be perfectly content to engage in unconstitutional activity once they, rather than the Democrats, wield power.

Take a look this morning at Thomas Sowell’s piece, Rhetoric Rides Again. I never miss a Thomas Sowell editorial, as they are all excellent. Sowell explains very carefully the difference between raising taxes on the “wealthy” and what the Democrats were actually trying to do with the Bush-tax-cuts.

Sowell explains what raising taxes on America’s small business people would mean:

Those who own their own small businesses have usually reached their peak earnings many years after having started their business, and often operating with very low income, or even operating at a loss, when their businesses first got started.

Again, having politicians step in with an extra tax at that point, when later incomes compensate earlier sacrifices, is sheer brass– especially when real millionaires and billionaires have their wealth safely stowed in tax shelters.

As you watch the sausage making process in Washington unfold over the next two years, and see a new tax code written, remember that the fate of every politician lies in your hands. Americans have the option to send any politician home any time he/she is up for election. That’s every two years for congressmen, every four for presidents, and every six for senators. That is your most fundamental and powerful right, wield it with care.