The looming expiration of critical tax provisions on January 1, 2013 is part of what many analysts are calling the "fiscal cliff." Others have dubbed this economic doomsday scenario "Taxmageddon." Recently, the nonpartisan Congressional Budget Office (CBO) found failing to prevent scheduled tax increases at the end of the year likely would contribute to a recession in early 2013. The stakes for our struggling national economy and Nebraska families could not be any higher.
Among the tax provisions set to expire are the current tax rates for middle-income earners and small businesses, which were enacted in 2001 and 2003 and extended with bipartisan support in 2010. Should these provisions be allowed to expire, we would experience the largest tax increase in American history. It also would be the most ill-timed tax increase in American history, with the national unemployment rate increasing to 8.2 percent in May -- the 40th consecutive month of joblessness above 8 percent. If Washington wants this post-World War II record to continue, all it has to do is nothing.
Doing nothing is not an option for me or the House Majority. In the weeks ahead, the House will act to prevent this devastating tax increase from hitting American families and small businesses. Consumers and businesses alike need the certainty their taxes are not going to be raised if they are going to spend and invest in the economy. Until that certainty is provided, money will continue to sit on the sidelines and fewer people will be able to find work. I look forward to working on the Ways and Means Committee to craft a responsible, bipartisan proposal.
Of particular concern to Nebraska is the Estate Tax, better known as the Death Tax, which is set to jump to 55 percent with the exemption falling from $5 million to $1 million. With land prices being valued so high in Nebraska thanks to a strong agriculture economy, this tax will disproportionately affect small businesses and family farms. Moreover, the additional uncertainty created by this problem puts the next generation of Nebraska business owners, family farms, and entrepreneurs at a further disadvantage.
I've met with many Nebraskans across the Third District worried they may have to sell the family farm or business because of this burdensome tax. I cannot begin to imagine how difficult it is to be forced to sell your own livelihood just to pay a tax; or to see your job vanish because the IRS drove your employer into bankruptcy. Death should not be a taxable event, and you should not have to sell the family home, business, farm or ranch just in order to foot the bill for Washington's unsustainable spending.
These dilemmas before us underscore the urgent need for comprehensive tax reform and a permanent repeal of the Death Tax, both top priorities for me on the House Ways and Means Committee. A complete overhaul of our tax system focusing on lower rates, a simpler code with fewer preferences, and a broader base would provide Nebraska families and businesses with the certainty they need and help generate economic growth. Bipartisan consensus is forming around these principles, I am optimistic about accomplishing major reform in the future.
With the nation's economy still struggling to recover and prosperity in Nebraska in immediate jeopardy, allowing these tax increases to take effect is irresponsible and would be devastating for our state. If we are going to keep living the Good Life, we must act now.