This Week in Washington – Friday, December 3, 2010
While it may seem as though 2010 just began, New Years is rapidly approaching. For most, the beginning of a new year is a time for reflection with friends and family. It is also an opportunity to look forward to all of the possibilities the future holds. Unfortunately, this year as we wait for the ball to drop in the Big Apple we are also counting down to the largest tax increase in American history.
On December 31st, the current tax rates will revert to the old tax rates of 2001. For comparisons sake, here's what they currently are compared to what they will be:
10% will become 15%
25% will become 28%
28% will become 31%
33% will become 36%
35% will become 39.6%
Along with these increases, the marriage penalty would return, as would the death tax – jumping from 0% this year to 55% next year. The child credit would be cut in half from $1,000 to $500. These are real numbers with real costs. The cumulative cost to taxpayers is approximately $3.8 trillion (that's with a "T"). An average American family of four would see roughly $2,200 in tax credits disappear under these new conditions.
My belief is that we should not raise taxes on anyone as our economic recovery struggles to gain traction. We should extend this tax relief permanently in order to provide certainty for individuals and small businesses. The biggest complaint I hear from small businesses is that they are afraid to hire more people because they are uncertain what new tax or regulation Congress will pass next. Clearly, their concerns are well founded.
Congress needs to supply that certainty by passing permanent tax relief for all Americans before January 1st. I can't think of a better way to ring in the New Year.
This Week
On Wednesday, the House approved what is known as a continuing resolution or "CR" which keeps the federal government up and running on a temporary basis. This CR would provide funding for government operations at Fiscal Year 2010 levels through December 18, 2010. At that time, we will once again have to pass another continuing resolution for a yet to be determined amount of time. I was unable to support this resolution.
While the federal government performs many necessary functions, I simply cannot support funding it at the current, significantly elevated levels. Currently, many federal agency budgets are still bolstered by unnecessary and ineffective "stimulus" dollars. Right now we are borrowing every dollar Washington spends. Simply returning to Fiscal Year 2008 – or pre-stimulus – levels for this CR would have saved billions of dollars over the next two weeks. With our current budget deficit, we should take every opportunity to achieve savings. I believe we missed an opportunity to do that with this vote, and future generations will now on the hook for the money we are about to spend.
On Thursday, the House approved H.R. 4853, over my strong disapproval. While H.R. 4853 would have extended some provisions contained in the 2001 and 2003 tax relief packages, I was unable to support it because it would have unnecessarily increased taxes on many small business owners, farmers and families. I simply cannot support any bill that raises taxes in this economic climate, a position that is supported by a bi-partisan coalition of my colleagues and hundreds of economists.
This House will be in session next week. Have a great weekend.
Sincerely,
