Barro: Obama Should Give Americans Some Certainty on Tax Policy Plans

January 29, 2010

Former Tax Foundation researcher and current Manhattan Institute fellow, Josh Barro, has a piece in today’s Investor’s Business Daily.

In it, he argues that Pres. Obama should give investors and businesses some certainty regarding what he plans to do in three big policy areas: taxes, health care and climate policy. Here’s Barro advising Obama on taxes:

The clearest opportunity is on tax policy. President Obama has already made clear that he intends to let the Bush tax cuts for high earners sunset next year, restoring a top income-tax rate of 39.6%. But that’s a floor — investors don’t know how high tax rates could go. For example, the House health care bill would take the top rate to 45% and also raise taxes on capital income.

Obama should announce that he will veto any bill that raises income taxes higher than Clinton-era levels, so investors and small- business people have clear expectations about how they will be taxed. It would be best to also maintain the 15% capital income rate set in 2003; but even a firm commitment to a 20% rate — again, the Clinton-era level — would provide valuable certainty.

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