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YIN: TEMPORARY TAX PROVISIONS ARE GOOD

May 22, 2008

George Yin, the former chief of staff of the Joint Committee on Taxation, makes an unusual argument. Guest-blogging at Tax Vox, Mr. Yin argues that temporary tax provisions are a good thing:

Consider, for example, the research credit, first enacted in 1981 for a temporary period and generally extended for only one or two years at a time ever since. By passing and continuing the program in temporary increments, Congress has had to take its cost into account for every one of its over 25 years of existence. Each year the credit has been due to expire, Congress has had to determine how to “pay for” its continuation. Even when Congress has simply let the deficit swell and not paid for the continuation, the cost of the program has no doubt crowded out other Congressional spending.

If, instead, the program had been first enacted on a “permanent” basis, the cost of continuation would have disappeared long ago off of the Congressional budget radar screen. The program’s cost, about $8 billion per year, would simply be part of the “baseline” cost of maintaining current law and not require any Congressional approval.

This argument would be more convincing if Congress had ever actually decided "hey, we just can't afford the extenders this year. We'll skip them and save the money!" It just doesn't happen. The congresscritters have no intention of letting them expire. But by only passing them for a year at a time, they conceal the true cost of the provisions under Congressional accounting rules - a set of rules that makes Enron accounting look prudent and responsible.

But while I disagree with Mr. Yin's point, I'm glad he is finally taking some good advice.

Tags: tax policy.

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