'Taxmageddon': Not so hyperbolic
The potential year-end expiration of existing tax rates, exemptions and incentives, combined with new federal spending required by law, has been dubbed "Taxmageddon." Hyperbole?
From The Washington Post, "CBO: Taxmageddon would throw U.S. back into recession":
Tax hikes and spending cuts set to take effect in January would suck $607 billion out of the economy next year, plunging the nation at least briefly back into recession, the nonpartisan Congressional Budget Office said Tuesday.
Unless lawmakers act, the economy is likely to contract in the first half of 2013 at an annualized rate of 1.3 percent, the CBO said, before returning to 2.3 percent growth later in the year.
Canceling those tax and spending policies would protect the recovery in the short run and encourage more vibrant growth, around 4.4 percent, in 2013, the CBO said.
At the same time, America does have a serious deficit and debt problem. BRT's view is that U.S. fiscal straits cannot be solved without policies that encourage economic growth. In any case, not Taxmaggedon. More like a fiscal cliff over which America will plunge.
- CBO executive summary, "Economic Effects of Reducing the Fiscal Restraint That Is Scheduled to Occur in 2013." Report's full text, CBO blog post.
- See also BRT blog post by our VP, Matt Miller, "The clock is ticking on expiring taxes—and a huge economic impact."