Elizabeth Taylor’s Marital Journey and a Call for Tax Policy Permanence
Academy Award-winning actress Elizabeth Taylor was married seven times, each union entered with hope for lasting happiness. It’s funny how we often believe that good things must endure, right? But in Washington, the idea of permanence is frequently treated with skepticism, especially in tax policy. Just look at the baffling rules surrounding budget resolutions, which lead Congress to repeatedly enact reforms that have already expired, as if the expiration dates mean nothing.
Take, for example, a potential permanent extension of key provisions in tax legislation. Such moves would yield more substantial benefits than merely extending them temporarily. Think about it: one major tax bill, which passed the House and became part of President Trump’s 2017 Tax Cuts and Jobs Act, holds great potential for growth. Yet there’s a risk that some vital elements won’t be extended forever. That’s problematic. It seems like good things should stick around, right?
Continuity in Growth Policies is Essential
This month, a nonprofit focused on unleashing prosperity, in collaboration with President Trump, collected signatures from over 300 economists urging Congress to permanently expand those tax cuts. The aim? To fend off looming tax hikes set for January 1, 2026.
But why push for permanence? Well, in the realm of public policy, measures that offer stability tend to foster better economic outcomes. Temporary policies, on the other hand, breed uncertainty, which complicates planning for both businesses and consumers. Not good, right?
A permanent extension of certain key provisions in the tax settlement bill would cause more immediate economic impact than a temporary one. It’s that straightforward. The Tax Foundation notes that prolonging these provisions could significantly enhance long-term economic outcomes. They mention that things like 100% bonus depreciation and favorable research and development deductions play a crucial role.
In fact, the Tax Foundation reached this conclusion:
The current package will likely yield lower long-term effects on GDP and U.S. capital if these cost recovery regulations face expiration. Legislators need to maintain the most growth-oriented provisions without compromise as they debate tax packages.
This perspective is consistent with broader economic studies. A 2019 survey from the St. Louis Federal Reserve indicated that increased uncertainty generally harms various economic indicators. If only that warning were emblazoned on billboards: “Policy-induced uncertainty is dangerous for our economy!”
Economic Stability at Risk
Fortunately, Senate Finance Committee Chairman Mike Crapo (R-Idaho) is expected to push for permanently extending significant provisions in the tax settlement bill. Well done, Chairman!
But why would over 300 economists advocate for preserving these tax cuts? It’s simple—if tax rates increase as scheduled, the ensuing economic fallout could be quite severe. For instance, Wells Fargo anticipates an average job creation rate plummeting from 133,000 in the first quarter to merely 25,000 in the following quarter, potentially dropping to 17,000 jobs per month later on. Yikes!
If Congress doesn’t act on these tax cuts, Wells Fargo believes economic growth could dwindle to just 1.1% this year and next.
A Cautionary Note for Deficit Minders
For those concerned about the deficit, here’s the contradiction: dragging the economy into a recession is the surest route to undermine the nation’s fiscal health.
Former Congressional Budget Office director Douglas Holtz-Eakin highlighted this by saying that if tax increases proceed as planned, they are likely to precipitate a recession—one that would only worsen the budget outlook.
It’s truly quite simple.
Elizabeth Taylor famously quipped, “If you hear I’m getting married again, slap me!”—perhaps she understood the importance of making choices with lasting significance.
To stave off a recession, Congress ought to rethink the scheduled tax cuts for next year. Yet, to truly promote economic growth, it seems they would need to take a cue from Crapo and permanently extend the provisions of the 2017 Tax Cuts and Jobs Act.
