New At Reason: Libertarian Support for the Tax Compromise

Following up on yesterday’s blog post beginning an argument supporting the tax compromise, today I have an op-ed at attempting to flesh out the libertarian case for the House joining the Senate in support of extending the Bush-tax cuts. Here is the boiled down summary:

Libertarians can support the tax compromise. Does it add to the deficit? Technically yes. Does it extend an ineffectual spending program? Yep. Does it only offer limited support to a market that will be concerned by the temporary nature of the extension? Most likely.

But while the compromise is uncomfortable, expensive, and rushed, letting tax rates go up would be an even worse mistake than the compromise could ever be. The tax hike would be two hands around the throat of American savings, investment, consumption, and entrepreneurship—squeezing hard. And given the political reality facing Congress, an extension of the current tax rates in exchange for a one-year unemployment benefit extension and absence matching spending cuts is a fair trade for saving the economy from a crippling tax hike.

Now, don’t confuse the pragmatic language for an abandonment of principle. Consider that, given how accustomed we’ve grown to the current tax rates, that a failure by the House to pass this bill would be nothing short of a massive, far-reaching, unconscious tax hike. And whether or not you think we need the revenues to balance the budget, changes to the tax code should not come without some substantive debate (which hasn’t happened) and conscious intent for the higher rates. Allowing the calendar to dictate a tax hike ad hoc that isn’t part of an intentional plan to address America’s budget problems is very poor tax policy.

At the end of the day, allowing a sweeping tax hike on all Americans is a bad idea. That shouldn’t be allowed to happen. And libertarians should stand against it.

For my whole commentary, see here.

Anthony Randazzo

Anthony Randazzo is director of economic research for Reason Foundation, a nonprofit think tank advancing free minds and free markets. His research portfolio is regularly evolving, and he maintains a wide interest in economic policy at both a domestic and international level.

Randazzo is also managing director of the Pension Integrity Project, which provides technical assistance to public sector retirement system stakeholders who are seeking to prevent pension plan insolvency. His research focus on the national public sector pension crisis has a dual focus of identifying the systemic factors that cause public officials to underfund pension obligations as well as studying the processes by which meaningful pension reform can be accomplished. Within the Project he leads the analytics team that develops independent, third party actuarial analysis to stakeholders considering changes to public sector retirement systems.

In addition, Randazzo writes about the moral foundations of economic theory, and is currently developing research on the ways that the moral intuitions of economists influence their substantive findings on topics like income inequality, immigration, or labor policy.

Randazzo's work has been featured in The Wall Street Journal, Forbes, Barron's, Bloomberg View, The Washington Times, The Detroit News, Chicago Sun-Times, Orange-County Register, RealClearMarkets, Reason magazine and various other online and print publications.

During his tenure at Reason he has published substantive research on housing finance, financial services regulation, and various other aspects of economic policy at the federal level. And he has written regularly on labor economics, tax policy, privatization, and Turkish-U.S. political and economic issues.

Randazzo has also testified before numerous state and local legislative bodies on pension policy matters, as well as before the House Financial Services Committee on topics related to housing policy and government-sponsored enterprises.

He holds a multidisciplinary M.A. in behavioral political economy from New York University.

Follow Anthony Randazzo on Twitter @anthonyrandazzo