Following up on yesterday’s blog post beginning an argument supporting the tax compromise, today I have an op-ed at Reason.org 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.