Thoughts on the tax deal
Congress seems like it’s actually been getting some things done lately. In addition to the Senate repealing Don’t Ask Don’t Tell today, both houses recently passed, and President Obama signed, a compromise bill to both cut taxes and extend unemployment benefits. While anything that involves tax cuts is a good thing, it’s disturbing that neither Congress or Obama is taking any serious measures to reduce our national debt.
Here are the main points of the tax deal:
- The “Bush tax cuts” will be extended for 2 years.
- Unemployment benefits will be extended for 13 months.
- Workers who make $106,800 or less will pay 4.2% of their wages to Social Security instead of 6.2%.
- The estate tax will continue, but at a lower level.
The bill has some of what Republicans want (lower taxes) and some of what Democrats want (free stuff for people), but anyone with common sense can see that these are not a good combination when it comes to long-term financial success. As W.E. Messamore explains, cutting taxes without cutting spending will eventually result in higher taxes in the future. Compromise is often a good thing, but compromises between Republicans and Democrats have resulted in more spending without more taxes, and therefore a national debt of $13 trillion and counting. I’m no supporter of raising taxes – which I think are way too high to begin with – so I think that the just way to pay down the national debt would be to leave taxes as they are and significantly cut spending. Politicians need to be brave enough to make the unpopular choices that will put our country on the right financial path.



