Devising a temporary tax scheme ("Bush-era tax cuts", payroll tax holidays, cash for clunkers, homebuyers tax credits, etc.) is like asking a family to build their home on a cliff overlooking the ocean, while knowing a crushing tidal wave is heading their way.
Speaking of cliffs, more than a few economists (those crazy-accurate forecasters NOT!) predict that us going over the coming "fiscal cliff" (the expiring "Bush tax cuts" and the "payroll tax holiday", the beginning of taxes related to the new health care law, the end of certain business tax breaks and significant government spending cuts) is akin to economic suicide - assuredly plunging our fragile economy into yet another deep recession. Therefore, given the risk to the career of the sitting politician, odds are decent that we'll see - yes - extensions. Deals will be struck and the fiscal hurricane will turn and head back out to sea. But never, alas, to yield its momentum to the atmosphere. It'll remain a few miles off shore - stronger than ever (grows stronger in our denial) and very much in sight. And there we'll stand on the cliff's edge, watching, waiting, wondering. No more certain, no less liquid, and no more inspired to get our money working than we were in late 2012.
I say we might as well jump. I say we let the whole kit and kaboodle of tax cuts expire, and allow the spending cuts to take full-effect - and never look back. I can't deny the probability that we'll take our economic lumps, but we will have indeed remedied what many (me included) consider the (present) chief deterrent to growth; uncertainty. We may not like it, but at least we'll finally know the rules. Only then will we be able to look to the future and begin crafting smart permanent, certainty-inducing tax policy.
Yeah, I know, it ain't happening.
http://www.youtube.com/watch?v=R62zcvQl4Nc&feature=youtube_gdata_player
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