As long as the effective rate remains the same, I don't think many would argue. The argument comes from raising rates,
This is what I may be missing from the deduction argument. To me it is semantics, money is money. Raise your rate or remove deductions and your tax burden increases. Maybe, you can explain it a different way, or show me what I am missing [no sarcasm].
especially in such a bad economy. Do we go the route of short-term gains (raising taxes on the wealthy) only to have it make the economy worse?
Here is where I disagree. I don't think the economy will come to a halt with small increases. The economy was working before these cuts [nod to the dot-com boom]. Millionaires will still want to increase their wealth. People won't quit participating in the market because of a reasonable tax increase because 1] There aren't many better alternatives, 2] the rich have the means and want to grow their wealth. Romney himself said that the rich are doing just fine in this economy, not that I am advocating increases only to the rich. Incremental increases across the board are fine with me.
About the effectiveness of the Bush cuts, there is plenty of debate about them. Who benefited the most, did it actually spur growth, etc.
The federal government has taken in record and near-record revenues every year since the Bush tax cuts went into effect in 2005.
If we look at inflation adjusted numbers, the only boom years under the cuts coincide with the Housing Bubble. '06 and '07 saw huge jumps and to a lesser extent '08. The years '09, '10, and '11 look just like '03 and '04. http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=200
This is a global recession. The extra money in the economy from the cuts isn't necessarily going to lead to growth, even though some companies are doing great and even hoarding cash. Why is that? Like you said uncertainty. That is why I think we need to go after receipts up front instead of playing the market game. http://www.theatlantic.com/business/archive/2012/07/the-5-trillion-stash-us-corporations-money-hoard-is-bigger-than-the-gdp-of-germany/260006/ Image: http://cdn.theatlantic.com/static/mt/assets/business/assets_c/2012/07/Investment_PPI-thumb-615x380-93369.jpeg
I've said for a while the best thing the President and Congress could do would be to freeze rates for 7 years. This would give businesses a level of confidence they haven't had for the past couple of years.
This is the best argument I have heard for keeping the cuts. But I still disagree. This is a global issue, and with Euro countries still likely to fail, I just don't see American cuts or increased gov spending fixing the issue [not that anyone is advising another stimulus or more spending]. Not to mention Obamacare.
So, in sum, the economy is a global problem, but our deficit is within our control. And we need to attack it from two fronts. Slight increases in taxes via deductions, loopholes, or rate increase. AND flat cuts or reform to spending programs.
I think a marginal increase in rates will for certain collect more revenue. Whereas, tax cuts and pray for the economy is not a guarantee of increased revenue. In fact, with the current global economic forecast, I think it is more likely the cuts will NOT spurn recovery. The only hope is a boom, such as the dot-com or housing bubble. No such boom is being predicted, and I think it would be awfully difficult to predict such a boom [how can you predict something like the internet]. Further, I don't think we can afford to waste time hoping for such a boom. How long can we let the debt and interest stack up in hopes of a rebound? It's going to be tough, but we are up against a wall.