"Commentary"-The Bush Tax
Monday, October 15, 2007SUZANNE PRATT: Tonight's commentator says now is not the time to let the Bush tax cuts expire. He's Glenn Hubbard, dean of economics and finance at Columbia's graduate school of business and former chairman of the White House Council of Economic Advisors.
GLENN HUBBARD, GRADUATE SCHOOL OF BUSINESS, COLUMBIA UNIV.: To hear the major presidential candidates talk, the big tax question is whether the 2001 and 2003 tax cuts should be extended. While that turns out to be a bigger issue than many candidates let on, there are other questions. Failure to extend the tax cuts will raise income tax burdens substantially, in fact, a 25 percent increase in the average tax burden by the end of the next president's first term.
Yes, high-income taxpayers will experience a 20 percent tax hike, but middle-income taxpayers will face a larger 30 percent tax hike. And the increases in the capital gains tax rate and the dividend tax will hit saving and capital formation hard. Even if the tax cuts are extended, personal income taxes as a percentage of GDP will rise by 15 percent by 2012 -- a $200 billion annual tax increase. To avoid this tax increase, additional cuts to corporate and individual income taxes would promote growth and incomes. Or the funds could be set aside as individual savings to pre-fund our entitlement obligations.
We need straighter tax talk from our presidential candidates. Those who advocate letting the Bush tax cuts expire should tell us about the large tax increases to come. Those candidates who argue that we need to keep tax burdens from rising should tell us specifically how they would reform the tax code to raise living standards. And we should ask. I'm Glenn Hubbard.
