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Monday, January 14, 2013

Johnston: The Fiscal Cliff Tax Deal Makes Deficit Worse

Tax Analysts David Cay JohnstonDeficits, Schmeficits, 138 Tax Notes 237 (Jan. 14, 2013)

Johnston argues that the fiscal cliff compromise will make it harder to solve the United States’ long-term deficit and debt problems.

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If that is the case then Fiscal Cliff might not be the very suitable solution to avoid debt ceiling. But Ed Butowsky says that it is beneficial to low-income families at the bills allows some working-class taxpayers to pay negative tax.

Posted by: Paulo McManus | Jan 14, 2013 9:13:55 PM

Whatever happens, Republicans say, cut taxes. Whatever happens, Democrats say, increase them. And we wonder why the country is in such bad shape?

Posted by: michael livingston | Jan 15, 2013 2:56:53 AM

Let me see if I understand the authors logic:

The government will spending slightly less money than they thought they would be, which will make life worse for lower income people. Is that it? And therefore, the less we spend, the more we hurt the poor, right? With that logic, the government should confiscate all income and spend it, so as not to hurt the poor.

This is irrational. The problem is the spending. We spend more than we have. How can the existence of a large national debt be good for any of us? We're all on the hook for the debt. To characterize what amounts to a 2% reduction in spending as "reckless" is nuts. The total amount spent this year will still be MORE than what we spent last year, due to the process of baseline budgeting.

How can spending more this year than we spent last year be called a cut? It's a cut from the plan, but not a decrease compared to the previous year.



Posted by: TioMoco | Feb 26, 2013 3:33:10 AM