Parties Could Compromise on Tax Policy

November 8, 2010

Gerald Prante has suggested in a New York Post opinion that in federal tax policy, there are avenues for political compromise.

One idea addresses housing subsidies. Democrats, who must weary of defending the indefensible Fannie and Freddie, would allow the Republican congress to eviscerate those money-losing government-sponsored enterprises in exchange for a tax-raising cap on the mortgage interest deduction, perhaps the 28% cap that President Obama has suggested in both of his first two budgets. (For a thorough, plain-English debunking of the arguments for keeping the mortgage interest deduction, see UC-Davis law professor Dennis Ventry’s article and our podcast.)

Another idea is climate-centric. The Republican congress would pass something on climate, maybe a gas tax hike, in exchange for a cut in the corporate tax rate.

We can’t expect the parties to meet in the middle on issues where they have fundamental disagreements, but we can hope that they’ll be willing to pair up some of their priorities and enact them as a package.

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