The "Bush Tax Cuts" are set to expire at the end of this year. If allowed, is this a bad thing?
Generally yes. Because congress handled the tax law ham-handedly, it was passed with a "sunset." So the wording gets tricky. Is allowing the law to expire a tax increase? Yes, it is.
Is raising taxes during a recession a bad idea? Yes, it is a certifiably terrible idea. It should go without saying that I think any tax increase ever is a bad idea, but there is positive economics out there that backs the original point, the latter being a matter of personal norms.
But if the tax rate is kept where it is, won't deficits increase*? Yes. Yes, they will. But Democrats seemingly don't mind deficits and, well, neither do Republicans. But Democrats seem to enjoy taxing the "wealthy," however defined, so at least rhetorically, they want to balance things a bit. Republicans talk a good game about cutting spending, but whenever given the opportunity to do so, don't. They don't want the political fallout of having to tell people "no, the government will not do that for you or give that to you." Democrats, to their disgrace, whenever Republicans do actually rattle their sabers and threaten some sop or giveaway, bring in the people who may be "harmed" and get them to testify that were it not for the generosity of the state taking something from one person to give it to them, well their life would be difficult.
But do deficits matter? This question, posed to any sensible person, will get you a puzzled look and an answer approximating "of course, you dolt." But thankfully for Democrats (& Republicans) we have people like Ezra Klein and James Galbraith (son of John Kenneth Galbraith) who say that there is "zero" danger with long-term deficit spending. I won't get into all the minutiae (Robert Murphy at the Ludwig von Mises Institute gets into some here), but spending beyond means is not good, and our sensible person is right and Ezra Kelin and Galbraith and Keynes and Krugman and Romer** are wrong.
So, should the tax increase go into effect? No. Because deficits don't matter. And "progressive" tax rates are un-egalitarian, unfair and immoral. It is morally repugnant that income over $x should be taxed at a higher amount. This punishes that which we should want to foster in society, namely success. The tax code is used as a "levelling down" device. It is used as a tool to affect "social change." It is used to punish. It should be used to care of that which the state has a legitimate interest in; paying for that which the government was granted the authority to do, not whatever a majority of elected officials want to do at any one time. That is why we have a constitution.
Further, progressive taxation increases incentives to hide compensation and hinders productivity.
The federal government shouldn't be funding schools, meals, churches, museums, parks, military bases in dozens of countries, housing, drug wars, hot wars (except in certain extreme instances and then only briefly), cold wars, dictators, democracies, policemen, firemen, hospitals, sugar growers, corn growers, wheat growers, communications commissions, agriculture commissions, election commissions, equal employment commissions, blue ribbon panels, retirement funds, disability funds or medical care. Get rid of this nonsense and then you won't need a commission on how to reduce the deficit.
*Currently $14,000,000,000,000 (that's $14 trillion or 14 x 10^12-another generation or so and we'll be approaching Avogadro's Number). Not including future liabilities. N.b-there are no future assets to offset those future liabilities, only future taxes.
**Romer's argument: "Extending the high-income tax cuts would provide very little job creation in 2011." This is fatuous. Look at this from a moral perspective: the more successful you are, the more you are to be penalized because you keeping more of what you earn won't create jobs for someone else next year. First, Romer was one of the twits behind the notion that if the "stimulus" package didn't pass, unemployment might go as high as 9%. Well, they passed and pissed away almost $1,000,000,000,000 and unemployment went even higher than that, so, as always, consider the source. The government is not an employment agency and people shouldn't pay taxes to affect job creation (which, we've seen, it doesn't).