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Debt ceiling deal: no new taxes (maybe)

August 01, 2011

It looks as though the debt ceiling deal won't do anything to the tax law, at least for now. TaxGrrrl reports:

What’s not in the agreement? Not. a. single. word. about. taxes. That, my friends, will change. Mark my words.

Shocking, if you thought deductions for business jets were the sole cause of the national debt. Via Instapundit, Daniel Mitchell of the Cato Institute explains where taxes may creep into the picture:

Here’s what Democrats like:
There appears to be nothing in the agreement to preclude the super-committee from meeting its $1.5 trillion target with tax revenue. The 2001 and 2003 tax legislation is not an option, but everything else is on the table (notwithstanding GOP claims that it is "impossible for Joint Committee to increase taxes").

In other words, there is a risk of tax hikes, just as I warned last week. Indeed, the five-step scenario I outlined last week needs to be modified because now a tax-hike deal would be “vital” to not only “protect” the nation from alleged default, but also to forestall the “brutal” sequester that might take place in the absence of an agreement.

But you don’t have to believe me. Just read the fact sheet distributed by the White House, which is filled with class warfare rhetoric about "shared sacrifice."

Still, if the 2001-2003 Bush-era rate cuts aren't on the table, it will be hard to raise taxes in a big way. They would either have to enact something like a VAT ahead of the election -- which would probably be suicidal -- or they would have to nickel-and-dime their way there one tax break at a time, arousing an angry swarm of lobbyists.

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