How I Generally See Obama's Tax Plan

Like these dudes Alan D. Viard, Alex Brill and Arthur C. Brooks in today's Washington Post.

To be sure, these "tax cuts" contain some sleight of hand. More than $400 billion of the money over the next 10 years would take the form of refundable tax credits paid in cash to people who already pay no federal income tax. It would be more accurate to refer to these cash outlays as cuts in payroll tax or -- even more accurately -- as transfer payments. Regardless of what the credits are called, though, they would put more money in the pockets of some American families. That sounds great in these tough economic times. Who can be against a boost to spending power and consumption?

We can. While a few of Obama's proposals may be sensible, the overall package would be bad for the economy. Unlike rate cuts for high incomes or reductions in investment taxes, most of Obama's proposed tax cuts would do little to reduce the tax penalty on work and saving. For some households, the penalty on work and saving would even increase because the new tax credits would be phased out as income rises. These proposals wouldn't deliver the economic growth that incentive-based tax cuts would.

Read the whole thing. As I think about it, again, there's the trend for 'stimulus packages'. Ick. It's a populist voter's rebate. We can't afford it. Have we simply given up the notion that Americans on the low end of the economic totem pole simply can't be incented to do anything smart with their money?