Thursday, February 9, 2012

This Forum Supports Republican Position on Extending the Payroll Tax Cut

Because Republicans Cannot be Wrong All the Time

When the Congress was unable to agree on how to extend the 2% point decrease in the employee’s share of the payroll tax last December, they passed a two month extension.  The idea was that in two months they would figure out how to extend the cut through the end of 2012.  Exactly why anyone thought that would occur is not clear. 

So now the end of February is approaching and the Congress has to figure out how to get the extension done.  As everyone might imagine, it is not going well.

Late Monday afternoon in Speaker John Boehner’s office, the Michigan Republican told House GOP leadership that the negotiations to extend the tax holiday seem like a replay of the disastrous deficit supercommittee, according to several sources present.

And now the Democrats are apparently talking about another short term extension

As recently as last week, a top Boehner aide warned that Republicans should be prepared for Democrats to push another two-month extension — and Republicans should come up with a plan to combat that

But Republican are balking at a short term extension, for very good reasons.

Michael Steel, a spokesman for Boehner, flatly said the House GOP won’t accept a two-month deal.

“Small-business job creators need the certainty of a full-year extension — not another two-month fix — and the speaker is opposed to another two-month fix,” Steel said in an email Monday.

Actually it is not just small business that needs certainty, it is all business.  As bad as the U. S. tax system is, Congress has made it infinitely worst by enacting temporary tax changes.  Being able to depend upon the certainty of tax laws is one of the key factors for business to hire and invest.  Business decision makers hate uncertainty; in fact they would rather have slightly higher taxes in a fixed system than slightly lower taxes in a system that is constantly changing.

So Republicans are right on this one.  Of course they only get partial credit because they are major contributors to the problem.  The biggest tax cuts of recent year, the Bush era tax cuts were a temporary measure.  Republicans started this process, but at least they are now becoming aware of some of their folly, and for that they get some credit.

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