In a discouraging development, the Chairman of the Senate Budget Committee has crafted a budget that does not make the Bush tax cuts permanent. He implies that the tax cuts can be extended if other taxes are raised, and he specifically suggests that legislation attacking so‐called tax havens could provide offsetting revenue. But these punitive and discriminatory bills would raise very little money (especially since they would force many American companies and entrepreneurs to reduce their efforts to compete in global markets). As the Wall Street Journal explains, Senator Conrad’s real goal is repealing the Bush tax cuts and imposing a huge tax hike on the productive sector of America’s economy:
Mr. Conrad has no intention of extending the Bush tax cuts… But Senate Democrats don’t want anyone to know this, at least not before the 2008 election. So Mr. Conrad says his budget revenue estimates “assume that Congress will take steps to counter the effects of the expiration of tax cuts in 2010 in a manner that does not add to the nation’s debt burden.” How so? Well, “this additional revenue can be achieved without raising taxes by closing the tax gap, shutting down illegal tax shelters, addressing tax havens, and simplifying the tax code,” he avers. …The 10‐year revenue increase from repealing the Bush tax cuts is something like $2 trillion, according to Congress’s static‐revenue models. Mr. Conrad is claiming that Congress will make up for all of that lost revenue by chasing down such illusions as the “tax gap,” which the IRS claims is the difference between the taxes people owe and what they pay. …All of this is really sleight‐of‐hand to disguise that Democrats are intent on repealing the Bush tax cuts. This would raise the tax on capital gains to 20% from 15%, more than double the tax rate on dividends to 39.6% from 15%, and sharply increase marginal tax rates at all levels of income. …The market fell 200 points on the day Mr. Conrad unveiled his magic act last week.