In 2001 and 2003, President George W. Bush signed into law sweeping tax relief bills. Although Republicans were the majority at the time, the tax cuts passed with bipartisan support. As a result of these cuts, our country experienced 52 months of uninterrupted job growth -- the longest in our history. Procedural rules of the Senate prevented these cuts from being made permanent so many of the tax rates will expire at the end of this year unless Congress acts to extend them.
Tax Cuts Key to Economic Growth
The historic tax cuts have helped American families and businesses keep more of their hard earned money for nearly a decade. The tax relief reduced income taxes, raised the child tax credit, eliminated the marriage penalty and abolished the death tax.
The tax relief has been instrumental in creating new jobs and expanding small businesses. Unless these lower tax rates are extended, Americans will be hit with the largest tax increase in our nation's history on January 1, 2011.
The President has said repeatedly that his number one goal is to create jobs and revive the economy, but his opposition to extending all of the tax cuts contradicts this objective. The looming 2011 tax hikes would weaken our recovery and further threaten the health of our economy. When testifying before the House Financial Services Committee recently, Federal Reserve Chairman Ben Bernanke acknowledged the importance of extending the tax relief package by saying it would help strengthen a U.S. economy still in need of stimulus.
Tax Hikes Stifle Small Business Jobs
Small businesses are the economic engines of our economy, generating 64 percent of new jobs over the past 15 years. The President's plan to allow tax cuts on small businesses to expire would deal a significant blow to American job creators and entrepreneurs.
Some in Congress oppose extending the tax cuts and say they want to raise taxes only on the "rich." However, these lawmakers fail to mention that small businesses are the ones who would take the hardest hit. Many small business owners pay income taxes at the individual rate rather than corporate rate, and therefore fall into a higher tax bracket even though they are far from wealthy. The 2011 tax hikes would raise taxes on 50 percent of small business income and 25 percent of the American workforce. At a time when our national unemployment rate is near double digits, it makes no sense to saddle small businesses with higher taxes.
Tax Hikes Burden American Families
Small businesses are not the only ones who will suffer from the potential tax hikes. According to estimates from the nonpartisan Joint Committee on Taxation, millions of families will be faced with thousands of dollars of tax increases if the tax cuts are allowed to expire. Income taxes would rise from 10 to 15 percent at the lowest end of the scale. In Mississippi, a family with a median income of $46,668 would pay about $2,000 more in taxes, representing more than a 100 percent increase.
Married couples filing jointly would be penalized with higher tax rates that would cost approximately 25 million couples an average of $595 each. Families with children also would have to pay Uncle Sam more money next year because the child tax credit would be reduced from $1,000 to $500 per child. This would cost 31 million families an average of $1,033 in 2011.
The tax hikes also would burden families after the passing of a loved one. Repealing the death tax as part of the relief package has ensured that Mississippi small business owners and farmers are not forced to sell the family business and write a check to Washington when a loved one passed.
Congress Should Act Now
With one out of every 10 Americans looking for a job, it is clear that our economic recovery remains unsteady. I do not believe raising taxes on any American or small business is the way to create jobs and restore the economy. Congress should act now and remove the uncertainty caused by this looming tax increase, which is prohibiting businesses from planning and investing. Congress should focus on reining in spending rather than taxing Americans to pay for new government programs created under this administration.