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- Both Republicans and Democrats agree on tax cuts, though they propose different types and have varied economic implications.
- Democrats passed a nearly trillion-dollar corporate tax cut through the Inflation Reduction Act and support large increases in child and earned income tax credits.
Overview:
- This article was written by Adam N. Michel, published on the Cato at Liberty Blog at the Cato Institute.
- It discusses the bipartisan nature of tax cut support in American politics, highlighting the complexity of fiscal policy beyond partisan lines.
- The piece also addresses the impending fiscal deadlines and the need for realistic budget planning.
Key Quotes:
- "Both Republicans and Democrats want to keep taxes from rising on the vast majority of Americans, and most legislators also want to protect higher-income Americans from punishingly higher taxes."
- "Policymakers’ instincts are correct; it is best to keep taxes low on Americans at every income level. However, keeping taxes low will require spending cuts."
What They Discuss:
- The continuation of the 2017 tax cuts, supported by President Biden, which would cost between $1.7 trillion and $2.5 trillion.
- The bipartisan agreement on tax cuts, with both parties proposing different types of cuts, yet generally aiming to reduce federal revenues.
- Democrat-supported tax cut initiatives, like the child tax credit and earned income tax credit, estimated to cost around $1.7 trillion over ten years.
- The fiscal challenges of extending the 2017 tax cuts without specific new taxes or spending cuts to offset the cost.
- The projected rise in budget deficits to approximately $2.8 trillion a year by 2033, even with automatic tax increases post-2025.
What They Recommend:
- The author suggests that maintaining low taxes for Americans at all income levels will necessitate significant spending cuts.
- A call for realistic offsets and financial planning in order to reconcile the desire for tax cuts with the current spending levels and budget deficits.
Key Takeaways:
- There is a general bipartisan consensus on the desirability of tax cuts, though differences exist in the types of cuts each party supports.
- The extension of the 2017 tax cuts is a significant fiscal challenge, requiring careful balancing of tax policies and spending reforms.
- The need for a realistic approach to fiscal policy that addresses the growing budget deficit while accommodating the bipartisan desire for tax cuts.
This is a brief overview of Adam N. Michel's article from the Cato Institute. For complete insights, we recommend reading the full article.
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