A few observations on extending the Bush tax cuts:
1. The action is not a tax cut for the middle class or the rich. It is a decision not to raise taxes. It is only a two year rather than a permanent extension so I don’t know if the incentive effects are very large.
2. People argue that we should raise taxes on the rich because they have gained x% of the increase in income since 1980. There is no “they” there. The people who were in the top 1% today are not the same people who were there in 1980. Some of them are dead. Some dropped out of the top 1% because they made bad decisions or had bad luck. Some of the top 1% today were not there ten or twenty years ago. Sergey Brin and Larry Page founded Google. They were not in the top 1% in 1980. They were 7 years old.
