Tax wonk Christopher Bergin has some concerns that if President Obama and Congress don't do something some about our tax system between now and the end of the year, a bomb will go off:
If Congress and the President do nothing about our tax system between now and the end of the year, here are just a few things in the tax law that will blow up. (From a Joint Committee on Taxation Report, JCX-1-12.)
- All of the so-called Bush individual income tax cuts go away. Not just the rates on the rich, but all of them. For people in the 10 percent marginal income tax bracket, your bracket is busted (sorry for the March pun). If your maximum rate was 25 percent, it’s now 28; if it was 28, it’s now 31; if it was 33, it’s now 36; and if it was 35, it’s now 39.6.
- The tax on capital gains goes up. And the special break for dividends goes away.
- The payroll tax goes up – for everyone.
- Child credits are cut.
- You will get a tax increase for being married.
- The estate and gift tax rules return to where they were in 2001. For example, the exemption amount goes from $5 million to $1 million and the top tax rate goes from 35% to 55%. How anyone can do estate planning these days is beyond me, and I get asked that question by tax practitioners a lot.
- Already gone is protection from the effects of the Alternative Minimum Tax for millions of taxpayers. Left that way, millions of middle-class taxpayers will see their 2012 income taxes go up by thousands of dollars.
Before I got to the end of Chris' post, I had formulated my position on the matter.
Fuck it. That's right. Fuck it, I say! Let it go. We should let it blow and walk away like Nicolas Cage walks away from explosions in awful Michael Bay movies and never look back. I don't say this because I've gone all apathetic on you or because I just want to spite Grover Norquist (well, maybe a little) but if you've been paying attention at all, you'll notice that the 111th/112th Congress is quite good at doing NOTHING. They are true pros. Tax policy is arguably the most important issue in our country. Sure, it's not sexy but this is how stuff gets paid for. Infrastructure, homeland security, thousands of federal government jobs (including the clowns that represent us on the Hill), exorbitantly priced muffins. They are all paid with taxes and our representatives treat it like some sick game. One side can't form a cohesive (or coherent) stance on the issue while the other side answers to you-know-who. They bicker back and forth for months, only to slap together some sorry excuse for a bill that temporarily fixes things. BHO throws his signature on it and we repeat the exercise in 12 months. Perhaps if I didn't have to pay so close attention to this issue, I wouldn't care so much, but I, for one, just want it to go down in a fiery heap of poo, with reoccurring violent explosions so the flaming poo gets all over Eric Cantor's glasses.
Yes, all those things Bergin mentioned will happen and things could get really, really bad for lots of people, but fixing the tax code will require a Congress that has to make hard decisions and find common ground. This Congress is not that Congress. And I'm not the only one who thinks this:
A friend of mine, who is a great tax policy expert, says we ought to let it happen – and I think he is only half kidding. Because it’s going to take a shock like I just described to get our lawmakers to face up to the mess of a tax system we have.
Get with me, people.
A Time Bomb of a Tax Code [Chris Bergin]