Here's a question, and it's not exactly hypothetical: Would you pay an extra $20 a year in taxes if doing so would help trim as much as $70 billion from the federal deficit? Republicans in Congress are hoping that your answer is no -- or at least that you won't think of framing the question that way.
Republicans in the House and Senate reached final agreement on $70 billion worth of tax cuts Tuesday. As the Washington Post reports today, the joint Urban Institute-Brookings Institution Tax Policy Center projects that the plan will provide an average of $20 a year in tax savings for middle-income American households.
We're betting that most "middle-income Americans" would see the wisdom in paying an extra 38 cents a week in exchange for a meaningful reduction in the federal deficit. The problem is, a few Americans would have to pay a whole lot more to make it all work. While the GOP plan provides $20 a year in tax savings for those in the middle, the Tax Policy Center says the plan will save the richest .02 percent of us -- the ones who make more than $1 million annually -- an average of $42,000 per year.
Don't worry if it all seems a little unfair; it's not going to last. As we noted last week, all of the president's tax cuts will be set to expire in 2011, at which point Congress will have to raise taxes on just about everyone who pays them or face budget deficits that are staggering even by today's dizzying standards.
And with the smoke and mirrors in the GOP's agreement, the consequences Congress will face in 2011 are even more dire than they would have been otherwise. As the Post reports, the House and Senate negotiators are offsetting the effect of the latest tax cuts by, among other things, making changes in IRA rules that could raise about $6.4 billion over the next 10 years. The only catch? The Urban Institute says the same changes will cost the government $36 billion over the next 35 years.