Tax Lawyer's Blog

Paygo isn’t a new idea, but Isabel Sawhill of the Brookings Institute makes a renewed demand for Congress to take it seriously (emphasis added):

There are many paths out of the fiscal swamp, but one in particular should be considered: paying for tax cuts.

From 2001 to 2003, Congress reduced taxes for just about everyone. Most of these changes were temporary and are slated to expire at the end of 2010, as is the indexing of the alternative minimum tax and various other temporary tax provisions. Why not simply allow these provisions to expire as planned (or extend them for only another year or two if needed to support the economic recovery)?

Alternatively, we could make any permanent extension conditional on the public and their elected representatives accepting much deeper spending cuts or offsetting revenue increases to make the tax cuts affordable. In other words, applying pay-as-you-go rules in a more serious way than the weakened form in which they were recently enacted. The message to the public would be simple: If you want to keep taxes low, you have to forgo some benefits. As my parents used to say, no dessert without the spinach.

Allowing the tax cuts to expire or paying for them would bring the federal budget very close to balance by 2020. And posing the choice this way creates the imperative for Congress to find the offsetting cuts.

Although I agree with Ms. Sawhill that the government should cut spending, I do not agree that the only time it should consider doing so is when it wants to cut taxes. It is immoral, cowardly and a breach of fiduciary duty for Congress to increase taxes before eliminating or significantly curtailing government waste.

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• Op-Ed on Tax Increases: The Government Doesn’t Deserve a Raise
• Tax Vox Proposal: Hire More Agents to Close Tax Gap

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