The dangers of deferral

The Hill on Sunday floated a trial balloon about the notion of “protecting” the middle class from those Taxmageddon tax increases by dispatching Treasury Secretary Tim Geithner to heroically refuse to collect the taxes:


Experts and lawmakers alike agree that Treasury Secretary Timothy Geithner has the power to adjust how much is withheld from paychecks for tax purposes ??? for all taxpayers or just for some.

By doing so, Geithner could ensure paychecks reflect the White House position that wealthier taxpayers with annual income higher than $250,000 see their taxes rise. Geithner at the same time could leave withholding tables where they are for the middle class, ensuring those workers don???t see a higher cut from their paychecks.

The idea seems more like an intellectual Frisbee tossed between think tanks than a real policy proposal… until about halfway through the Hill article, when we learn that at least two Senators, Democrat Ben Cardin and Republican Orrin Hatch, are taking it somewhat seriously, at least as a stopgap measure to protect the Sainted Middle Class if, as Cardin puts it, “there’s optimism as to how that’s going to become part of a deal.”  In other words, if it looks like Washington will agree in principle to carve a little more money from the hides of the Evil Rich, the Treasury Secretary could decide not to collect those Taxmageddon bucks from the Sainted Middle Class for a few months into 2013, until all the fine print gets worked out.

“One downside to the strategy is that it has a limited shelf life,” the Hill observes.  “If withholding is kept lower than the rates in the law, that means the tax bill at the end of the year will be that much higher.  So if no deal emerges to bring rates back down to the level reflected in the withholding, it will be up to taxpayers to make up the difference.”

Great!  One more sword placed over the necks of Republicans, to pressure them into selling out their principles and saddling America with tax increases, instead of sorely-needed tax relief and spending cuts.  This is even worse than the scenario where we go over the fiscal cliff and Democrats successfully blame Republicans for it.  If Geithner (who, in fairness, doesn’t sound crazy about the idea) is allowed to defer payment of the “fiscal cliff” taxes, they’ll become even more of a political threat against Republicans.  Just imagine getting halfway through 2013, and watching as Obama’s new tax-hike telemarketing operation bombards middle class voters with calls explaining they’ll be on the hook for a huge deferred tax bill, payable immediately, unless Republicans cave to the President’s demands.  Why, it would just be inhuman to expect people to write a check for $2000 at the end of the tax year!  They’ll all default – they would never be able to get their hands on that kind of money!

Isn’t it amazing how the Democrats have turned their own irresponsibility into a knife pressed against our throats?  Does anyone still think “solutions” like the Budget Control Act of 2011 are a good deal?  It’s set up a situation where Republicans might actually find a way to lose the fiscal cliff showdown twice.