When a Tax Hike Isn't a Tax Hike
4:58 PM, Nov 29, 2012 • By JOHN MCCORMACK
Norquist's answer doesn't make a lot of sense. Whatever desire Republicans had in 2001 and 2003 to make tax cuts permanent, they were in fact temporary. Furthermore, letting the temporary payroll tax cut expire will cost taxpayers $115 billion in 2013. Letting the current income tax rates expire on high earners will cost $50 billion in 2013. If it's okay to let the big payroll tax cut expire, it's hard to see why it's not okay to let the smaller Bush tax cuts expire on high-earners.
So Republicans won't be breaking their tax promise by cutting a deal, but the difficult question remains: What is the best deal they can get? Some Republicans seem to think a grand bargain involving tax and entitlement reform is possible. But President Obama and congressional Democrats are not publicly showing any willingness to reform entitlements or the income tax code. Some Republicans think that Obama is bluffing, and he will ultimately cave on extending all of the Bush tax cuts if Republicans just stand firm. But it's two (the Senate and the White House) against one (the House), and polls indicate more would blame Republicans more if we fall off the "fiscal cliff." And that's why other Republicans, like Tom Cole, say Republicans should simply take the deal to lock in current tax rates for those earning less than $250,000 and live to fight another day.
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