Saturday, October 23, 2010

No Way to Run a Country

TaxVox: the Tax Policy Center blog :: The Biggest Tax Policy Mistake of the Year
Will our leaders really allow the alternative minimum tax to hit 27 million taxpayers this year, a whopping 23 million more than in 2009? Did the estate tax really expire back in January, making 2010 the year without an estate tax? Will companies really receive no tax credits for their investments in research and development?

Under existing law, the answer to each of these questions is yes... But in today’s world, existing law doesn’t mean much until Congress throws in the legislative towel. The upcoming lame-duck session will thus feature healthy debate about patching the AMT, retroactively resuscitating the estate tax and extending a host of expired business tax credits — all policies that would determine 2010 taxes.

Such retroactive policymaking is an embarrassment. In a well-functioning democracy, policymakers should establish the laws of the land in advance so that families and businesses can knowledgeably plan their activities.

I don't believe that good economic policy involves creating "confidence" but I do believe people need to be able to understand the rules of the game. Is it really too much to ask of the current Congress to make the rules clear?


Marc said...

I strongly disagree Jeremy. Confidence is what it is all about. The confidence to risk capital, buy new equipment, etc. If all of the signals and policies are good, but the future political climate looks bad, many will not invest. When the current administration talks about taking from those who are successful, all the stimulus in the world isn't going to help.

J. Strupp said...

Yeah I would say creating confidence is definately significant part of good economic policy.

Dad29 said...

I'll pitch in with the other commenters.

A major component of 'confidence' is certainty about the rules. While changing the rules is not wrong per se, leaving the rules hanging in mid-air leads to lack of confidence.

And the AMT is a major-league game-changer.