"Washington is engaged in the worst kind of wordplay this month, as the spin-doctors go to work on the president's budget. After more than a year of promises that any tax increases would be limited to families making more than $250,000 per year, the taxes of the middle class may be set to increase, too.
But the administration refuses to call those higher taxes a tax increase, saying instead that they are merely allowing some tax breaks to expire.
If those tax cuts do expire, then every American who owes taxes after 2010 will experience a stealthy tax hike, and hundreds of thousands of low-income working Americans will owe federal income taxes for the first time in ten years.
If nothing is done to stop it, when the clock strikes midnight at the end of this year families in the 25 percent tax bracket will see their rates climb to 28 percent. Those in the ten percent bracket will be "promoted" to the 15 percent bracket. And Americans living on fixed incomes will pay higher taxes on dividends and capital gains that they count on to provide stable sources of income in retirement.
Also on the list of tax relief set to expire are $4,000 deductions for college tuition and expenses, $250 tax credits for teachers who purchase school supplies for their classrooms, and the first $2,400 of unemployment benefits will again be treated as taxable income. None of these tax increases is good for our economy in a crucial phase of recovery.
Economists and tax advisors may disagree on a lot of things when it comes to how tax policy affects our overall economy, but no one can argue that we are witnessing the most massive and expensive expansion of federal government in history. The federal deficit projected under the Obama Administration's budget for FY 2011 would weigh in at $1.27 trillion, barely off the record we are setting this year of a $1.56 trillion deficit. Just five years before, in 2006, the federal deficit was $247 billion. Furthermore, the president's budget raises taxes by more than $2 trillion over ten years on everything from small business income to domestic energy production. And the budget also proposes to reduce tax incentives for charitable contributions -- the cornerstone of relief efforts that follow major disasters both at home and around the world. The wholesale expiration of tax credits and income tax relief only heightens the strain on families already facing unprecedented challenges.
There is another affect of higher taxes on our economy. Discouraging investment in small businesses disrupts the primary engine of the American economy. Small businesses constitute the vast majority of American employers, and they are even more important in rural economies in Southern Missouri.
As government spending goes up, as the debt increases, as deficits grow, and as taxes rise, America gets closer and closer to a financial disaster that affects our standing in the world. Federal representatives on both sides of the aisle in Congress understand the dangers of this erosion in the power of the entrepreneur, the free enterprise system, and the purchasing power of the American family.
It is no time to raise their taxes, that's for sure. But at every turn, we are beset by the specter of higher taxes on energy, on private health insurance policies, and, now, on our incomes. As we stand firm on these intrusions of big government, we must also preserve tax policies that grow jobs and empower families."