Caution: Tax Cuts Are Bigger Than They Appear in Budget, Congress Uses 'Sunset Laws'

WASHINGTON -- Last week, President Bush again urged American business to "tell the truth to employees and shareholders" and practice "open accounting." At almost the same time, Republicans in the Senate, at the quiet but intense urging of the White House, massaged their own budget accounting rules to fit a $400 billion tax cut through a $124 billion hole.

After tax time this year, my wife finally "gets" it. The marriage penalty means her $12/hr job brings home less than an unmarried person working for minimum wage. If the marriage penalty isn't eliminated, she's going to simply stop working. If we could file separately and have each income taxed on its own merits, that would be fine. The insatiable desire of politicians to spend money ensures that will never happen.

Caution: Tax Cuts Are Bigger Than They Appear in Budget

Correct. To understand why, you need to understand Democrat economics.

Currently there's a 38% tax on corporations' foreign income brought back to this country. I don't know how much foreign income gets brought back, but say it's $10B yearly. This would mean the tax brings in $3.8B/yr.

Suppose the Repblicans end up cutting this tax to 5%. According to Democrats, this will cost "at least" $3.3B/yr. The reason I say "at least" is because of what will happen in future.

Suppose that companies which had avoided bringing income back into the U.S. decide it's suddenly worthwhile to do so. It's quite possible the amount of money brought back in this way could increase tenfold or maybe even a hundredfold. If this happens, the revenue brought in by the tax would be $5B or $50B.

Under Republican accounting, if the tenfold increase occurs, the tax cut would be said to generate $1.2B of extra revenue. And if a hundred-fold increase, $36.2B extra. In other words, it would have a substantial negative cost. Clearly a good thing.

According to Democrat accounting, however, if there is a tenfold increase in money brought back into the country, that would mean the tax cut cost ten times as much as predicted--$38B. And if there were a hundred fold increase, the tax cut would cost $380B. Obviously an insane tax cut to let remain on the books.

Well, as I understand this, it was a brilliant move by the GOP. Once the cuts are in place, it will be much more difficult for Dems to come back later and insist on "sunsetting" them, and much easier (especially if the economy rebounds) to demand that they stay.

FOLKS, THIS IS THE SAME WAY THE LIBERALS GOT THEIR MASSIVE WELFARE SYSTEM IN PLACE. NOW WE ARE REVERSING THE TREND---"It's only temporary. Don't worry. We'll repeal it later." Riiiiiiggght.

'Caution: Tax Cuts Are Bigger Than They Appear in Budget'

Correct. To understand why, you need to understand Democrat economics.

The Wall Street Journal has a "separation of church and state". The news writers don't talk to the editorial writers and staff and vice versa, unlike a well known newspaper published in New York City. This article is obviously from a lefty reporter not from an editorial writer.

Thanks for your comments. I was wondering why the WSJ would publish a "hit piece" about the tax cuts, from an obviously leftist perspective. But don't even the relative leftists at WSJ (as opposed to the editorial staff) "get" the tax cuts? Are even the leftists who get to the WSJ level still idiots? LOL!

I guess what I'm really asking is: If a leftist makes noise in a forest, is he still wrong?

Not all the leftists at WSJ are reporters. There is a feud betweent the Washington bureau and the New York bureau. Al Hunt writes a weekly (weakly?) column on Thursday which appears on the right hand page of the editorial section. Barf alert is implied. Otherwise the editorial section is wonderful. Before the Free Republic existed, it was one of the few places one could find a broad range of conservative thought on a all sorts of issues.

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