Friday, March 23, 2007
Interesting article on U.S. News & World Report: Bush's Nuclear Option on Taxes, by James Pethokoukis:
Let's say Democrats choose to pay for AMT reform by undoing the 2003 tax cuts. That would be a tough veto for Bush since the AMT will hit hard millions of middle-class taxpayers. So Bush could sign such a bill and then simply ring up Hank Paulson next door at Treasury and tell him to tell his staff to begin indexing capital gains for inflation by using its little-known and admittedly legally fuzzy power to define the word "cost" in the part of the tax code that concerns capital gains. Treasury did just the opposite back in 1913 after the income tax was ratified. So essentially, it would merely be undoing what it did back then. This would also be a way for a future president to save the 2003 tax cuts if Congress wants to let them expire at the end of 2010. Would many Democrats scream? Surely. Would a lawsuit be filed? Assuredly.