Wednesday, January 23, 2008

It only sounds insane

Len Burman of the Urban Institute dropped a bomb on the Times op-ed page today. He suggests rolling back the Bush income tax rate cuts a year early, in 2009, rather than in 2010, when they are currently set to expire.

He sounds nuts, but Burman makes a subtle point: if taxpayers expect a higher tax rate in 2009, they will shift some taxable activity, in this case working, into 2008 instead. And that should help stimulate the economy.

Despite what Burman and others have said regarding the 2001 fiscal reform, I doubt this would have as stimulative an effect as a broad-based tax cut that placed rebate checks in the hands of a lot of folks. But it is an interesting, although a completely counterintuitive and probably DOA, proposal.