Middle-Class Tax Cuts

Congress faces critical decisions about middle-class tax relief in the next two years. Most provisions of the Bush tax cuts are scheduled to expire at the end of 2010, as are the income tax cuts provided in the recent stimulus package. President Obama has proposed permanent extension of the Bush tax cuts, except for households with the highest incomes, as well as permanent extension of the stimulus tax cuts.

The concept of middle-class tax relief enjoys strong political support. Notably, the concept was endorsed by both President Obama and his Republican opponent during the 2008 presidential campaign. Nevertheless, I recommend that Congress not adopt a significant package of permanent middle-class tax relief at this time. Middle-class tax cuts provide limited incentives for the work and saving that drive economic growth while imposing substantial revenue costs. Adoption of a large package of permanent middle-class tax relief would add to the long-run fiscal imbalance and impede capital formation, increasing the fiscal burdens on future middleclass taxpayers and reducing wages for middle-class workers.

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Alan D. Viard is a resident scholar at AEI.


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About the Author

 

Alan D.
Viard
  • Alan D. Viard is a resident scholar at the American Enterprise Institute (AEI), where he studies federal tax and budget policy.

    Prior to joining AEI, Viard was a senior economist at the Federal Reserve Bank of Dallas and an assistant professor of economics at Ohio State University. He has also been a visiting scholar at the US Department of the Treasury's Office of Tax Analysis, a senior economist at the White House's Council of Economic Advisers, and a staff economist at the Joint Committee on Taxation of the US Congress. While at AEI, Viard has also taught public finance at Georgetown University’s Public Policy Institute. Earlier in his career, Viard spent time in Japan as a visiting scholar at Osaka University’s Institute of Social and Economic Research.

    A prolific writer, Viard is a frequent contributor to AEI’s “On the Margin” column in Tax Notes and was nominated for Tax Notes’s 2009 Tax Person of the Year. He has also testified before Congress, and his work has been featured in a wide range of publications, including Room for Debate in The New York Times, TheAtlantic.com, Bloomberg, NPR’s Planet Money, and The Hill. Viard is the coauthor of “Progressive Consumption Taxation: The X Tax Revisited” (2012) and “The Real Tax Burden: Beyond Dollars and Cents” (2011), and the editor of “Tax Policy Lessons from the 2000s” (2009).

    Viard received his Ph.D. in economics from Harvard University and a B.A. in economics from Yale University. He also completed the first year of the J.D. program at the University of Chicago Law School, where he qualified for law review and was awarded the Joseph Henry Beale prize for legal research and writing.
  • Phone: 202-419-5202
    Email: aviard@aei.org
  • Assistant Info

    Name: Regan Kuchan
    Phone: 202-862-5903
    Email: regan.kuchan@aei.org

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