WHY TAXES MAY RISE ANYWAY
Given our current budget debates, the context in which the debate is occurring is obviously important. Here is a good piece from Bloomberg on how the prospects for tax increases, of all kinds (income, estate, gift, etc.), are rising and possibly becoming more probable given our current laws. This is the case even though the Republican’s appear to be winning their stance on no tax increases. Why? Our current law (assuming Congress does not agree to do something to avoid it, which is becoming less likely), causes pre-Bush era (1990’s) tax rates to become law in 2013. The results are much higher tax rates across the board. The article accessed by link below is a good piece on how and why the probability of this happening is increasing. In summary, even if spending cuts are won by the Republicans and no tax increases occur, the Democrats can argue during 2012 political campaigns that we tried in 2011 but the Republicans refused to compromise, when Democrats sought permanent reform extending beyond 2013.
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Bloomberg Article by Ezra Klein: http://bloom.bg/o21LB0