Friday, February 16, 2007

White House Official Sets the Record Straight on Tax Hikes

The front page of today’s Wall Street Journal claims “Bush May Acquiesce to Higher Levies on Rich to Pay for Curbing AMT.”

This story is bunkum according to a senior White House official who emailed me earlier this morning:

“Larry—just wanted to touch base with you on this story in the WSJ. I don’t know who those “officials” are, but let me be very clear: they are not representing the President’s views. The story is dead wrong. The President proposed a balanced budget while making tax relief permanent and is firmly committed to keeping marginal tax rates low. The President supports the proposal in his budget. President Bush has proven that he’s a tax cutter, not a tax raiser.”

The key phrase here is “keeping marginal tax rates low.” That means no tax hikes on the 15 percent marginal tax rates for dividends and capital gains. It also means the 35 percent top personal tax rate.

By the way, Washington economist Alan Reynolds has a great idea. Instead of raising the top personal tax rate, why not abolish the 10 percent bottom tax rate? It’s scored as a $40 billion dollar revenue loss, even though no one pays it. $40 billion dollars is 80 percent of the estimated $50 billion cost of a one year AMT patch fix-up.

If I may be so bold, with ka-gillions of revenues pouring into Treasury coffers, it looks to me like the Bush marginal rate tax cuts are paying for themselves.