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BLOGGERS ON TAX POLICY IN A DEMOCRAT-CONTROLLED CONGRESS

November 09, 2006

Bloggers are weighing in on tax policy under Charlie Rangel and Max Baucus.

Virginia Postrel maybe has better eyes than me. She sees hope for comprehensive tax reform:

How about a loophole-closing, rate-flattening 1986- style tax reform from the new Congress? It would be a lobbyist nightmare, and a repudiation of the Clinton administration's zillions of tax credits for good behavior (extended by the Bushies). But if I squint really hard I can see it happening. Charles Schumer is talking the right way: "I don't think we want taxes to move higher at all; the kinds of things we're talking about easily funded about rearranging federal priorities making sure that some of the shelters are closed -- the offshore shelters and things like that. But the Democrats are against increasing taxes. We want to become more fiscally responsible." Not that I actually think this is anything other than Election Day spin.

Russ Fox at Taxable Talk sees only darkness, with a silver lining:

First, forget estate tax reform. I can't see it passing, unless it's something like a $2 million exemption with 45% rates above that. Second, forget any other major changes in the Tax Code. The Democrats have said they'd like to see new programs (that cost money), but unless tax revenues increase, those aren't likely to happen. I see two years of gridlock, which isn't necessarily bad.

Bitter blogger Daniel Shaviro has two posts on the election: Significance of the election, Part 1: the next 2 years, and Significance of the election, part 2: the role and meaning of bipartisanship. Mixed among Mr. Shaviro's characteristically subdued political judgements ("One can hope and pray that defeat leads the Republicans to reconsider their course, throw out the current cabal of incompetent, criminal lunatics...") is his assessment of tax policy issues:

The expiring tax cuts need to be addressed at some point, if only so people will know what to expect. The Democrats will not want to extend them, and Bush is probably unamenable to anything else. So perhaps we can expect the chicken games on this to continue through the 2008 election, with everything still unresolved. Likeliest exception: I could imagine an estate tax compromise (much higher exemption amount, lower rate as part of a "permanent" new regime), but only if Bush will sign on to make it veto-proof. Meanwhile the AMT will be growing, and I don't see how they are going to be able to make a deal addressing this, especially with paygo rules in place.

And the TaxProf has a big media roundup.

I see nothing major happening. I still expect expiring provison extenders to pass quietly in the lame duck session of Congress. Then we will see two years of small-ball proposals, like "tax gap closers," and extender patches, but mostly posturing and maneuvering for 2008.

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