Pelosi Congress – “most irresponsible ever”
Cato’s Richard Rahn has a great piece in the Washington Times today regarding federal tax policy and the debate over extending the Bush-era tax cuts.
Specifically, Rahn cites the historical evidence suggesting income and capital gains tax rates above 30 percent begin to generate fewer revenues – not more – because of the disincentive to work created by punitive tax rates. Allowing the Bush tax cuts to expire for the most productive workers – those who pay the bulk of federal taxes – would not increase federal revenues because, when combined with state income taxes, marginal tax rates would be pushed above 50 percent. However, such a change would lead to a less prosperous and less just society.
Rahn goes on to say “the Pelosi Congress has been the most irresponsible – ever,” because of its failure to pass a budget prior to the lame duck session and its failure to act on the Bush tax cuts even though it has had two years to do so. Now, there may not be a vote before the tax cuts even expire, and this uncertainty only exacerbates joblessness as entreprenuers, facing an uncertain cost structure, become reluctant to hire.