Waking up looking forward to college bowl games is a tradition on New Year's Day. But this year, those small businesses struggling to create jobs may wake up to find themselves dealing with a $3.8 trillion headache instead of watching football.
Unless Congress acts, a $3.8 trillion tax hike is set to take effect on January 1, 2011. What does this mean for you? The average Nebraska family will see their federal income taxes skyrocket from $3,461 to $5,090 - an increase of $1,600.
Our nation's unemployment is still above 9 percent and 15 million Americans are looking for a job. That's 7 million more than when Nancy Pelosi was sworn in as Speaker. In fact, unemployment has been above 9 percent for 16 consecutive months.
We've seen the results of failed economic and fiscal policies - deficits, debt, and an economy which continues to struggle. It is time to stop playing political chicken with our economy and for all sides to work together to get our country back on the right fiscal track.
However, instead of putting forth a bipartisan plan to spur job creation, some are proposing doing the exact opposite. In just a few months, they are poised to allow the largest tax increase in history on American families and small businesses to take effect.
Raising taxes on small businesses and family-owned farms and ranches will not result in more jobs. It is simple: businesses don't hire when taxes are higher - especially during an economic downturn. Employers and entrepreneurs need assurances their costs will not increase before they start hiring again.
One tax increase I want to point out is the estate tax - also known as the Death Tax - which will skyrocket to 55 percent with a $1 million exemption. The Death Tax discourages savings and investments in small businesses and family farms, threatening their very existence from one generation to another. Some estimates show a full repeal of the Death Tax would create 1.5 million jobs, increase small business capital by more than $1.6 trillion, increase payrolls by 2.6 percent and expand investment. In fact, estimates show the Death Tax costs the economy more in lost growth than it brings in.
I am a cosponsor of a bill to permanently repeal the Death Tax, and last year I voted against a bill to set the tax permanently at 45 percent with a $3.5 million exemption, both because the rate was too high and because there was no inflation index in the bill. A compromise proposal setting the rate at 35 percent and $5 million is currently stalled in the Senate.
We have to take action to prevent tax increases, like the Death Tax. We won't solve our fiscal challenges until we cut spending, stop the growth of government, and extend current tax rates.
This is why I support a bipartisan effort to spur job creation by cutting non-security government spending to 2008 levels. Exceptions would be made for homeland security, seniors, and veterans programs. It is estimated this would save taxpayers $100 billion in just the first year.
I also have called for freezing current tax rates for the next two years - creating certainty for our small business owners while saving middle class taxpayers from a hefty tax increase.
Now more than ever, our country needs real economic growth - something which can't happen if Washington keeps raising taxes on farms, ranches, and small businesses.