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TAX POLICY DISASTER AREA

September 09, 2005

Two tax blogs have thoughts on how Katrina will affect tax policy.

Daniel Shaviro, the Better Bitter Blogger, lives up to his nickname (ok, only I call him that) with this:

2) This brings me to topic 2, income tax policy responses to Katrina. My guess is that a bipartisan process of corruptly giving handouts to campaign contributors and calling it Katrina relief will rule the day. E.g., the Republicans give billions of dollars to energy companies and pretend that this is a response to Katrina. But rather than use their usual playbook of the last few years - putting a dishonest label on something and then trashing the Democrats if they oppose it ("They're against Katrina relief!"), perhaps this time the strategy, given Bush's political weakness on Katrina, will be to give enough Democrats enough pork that the bill will pass by bipartisan acclamation. So I anticipate a disgusting multi-billion dollar giveaway that masquerades as a response to the people hurt by Katrina and the need to rebuild but that in fact is nothing of the sort.

While his implication that Democrats are more honest than Republicans on policy matters is silly (they're all politicians, after all), his forecast is probably dead on.

Meanwhile, the Tax Policy Blog forecasts lots of temporary fixes, and explains why they are bad things:

Temporarily removing a revenue source now without cutting spending merely means that you, the taxpayer, will pay for it in some other form down the road. It may just be in the form of higher taxes elsewhere, like income, or higher deficits; and it means that the burden may be shouldered by someone else.

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