I received an email today from a
reader who felt strongly that the answer to the fiscal cliff was to adopt
Simpson-Bowles proposals and do a massive tax reform….
I have already supported
Simpson-Bowles in my columns. However, massive tax reform cannot be
done in 11 days (when Congress recesses).. If anything is to happen before then, we are looking at a 2 step approach...first,
to avoid the fiscal cliff with something that has more than a short shelf
life..or else investors sitting on $1.6 trillion will be stuck in
purgatory for the immediate future and the economy and job creation will
suffer. Second, to reform the tax system. I like Romney's bucket
limit on deductions because it will confuse and diffuse the special interest
lobbyists. I can imagine the avalanche of special interest lobbyists that will
descend on DC if deductions are removed deduction by deduction. It
appears that both Democrats and Republicans agree to keep hands off middle
class mortgage deductions, though. I am in favor of the tax rate
increase on the top 2%,..per the recommendation of the Simpson Bowles (in its
final form)... because it is politically popular and will keep some of
the dire cuts on entitlements from happening. However, as Steve Rattner
points out today in the New York Times, neither the GOP proposal nor Obama's
proposal reduced the deficit enough to bring it into an acceptable ratio with
the GDP. If so, tax reform needs to happen on top of either of the two
proposals now on the table.
http://opinionator.blogs.nytimes.com/2012/12/03/from-all-sides-fiscal-plans-fall-far-short-of-whats-needed/?emc=eta1
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