Supposedly, nothing is certain but death and taxes. But that's not so true right now for federal taxes. Just how much we'll have to pay, beginning in 2011, is far from clear.
With most of the Bush-era tax cuts expiring at year's end, and the nation mired in record federal deficits and debt, the specter of tax increases looms large. Uncertainty about what that will mean for household budgets has added to consumers' wariness about spending. And with demand lagging, businesses and investors - already surveying the changing landscape in financial regulation and health care - are sitting on their cash.
Congress should inject some clarity by deciding, before the November election, which tax cuts it will extend and which it will allow to expire. The 2001 and 2003 cuts slashed rates, doubled the child tax credit, eliminated the marriage penalty and phased out the estate tax. They also sliced taxes on capital gains and investment income. But the world has changed since those heady days of federal surpluses. Two wars, a financial meltdown and recession later, those tax cuts have added $1.7 trillion to the national debt.
It would be easier politically for Congress to put off action until December, when the report of the president's deficit reduction commission is due. That blueprint should be helpful. But any credible plan will have to include both less spending and more revenue. So why wait? On taxes, knowing what the future holds would be good for taxpayers, and for the economy. hN