How Low Can We gO?

clipped from blog.american.com President Obama would permanently extend the Bush tax cuts for households with incomes below $200,000 ($250,000 for couples); statements that the president would allow the Bush tax cuts to expire are true only for households above those income levels. The president has also proposed some additional middle-class tax cuts. Should this make us happy about President Obama’s budget? Quite the opposite. As Arthur Brooks, Alex Brill, and I have pointed out, the middle-class tax cuts that the president would extend have large revenue losses and do relatively little to promote economic growth. The tax cuts at the top that the president would allow to expire would significantly lower marginal tax rates on saving and investment and promote long-run growth. Letting those tax cuts expire would ultimately harm the middle class by lowering their wages.