On January 1, 2013, a $494 billion tax increase is scheduled to take effect when the tax cuts enacted in 2001 and 2003 expire. According to the Heritage Foundation, if the current tax rates are not extended, the tax increase for the state of Tennessee alone will be $8.05 billion. That's an average $2,690 tax hike for every hardworking family in Tennessee. At a time of high unemployment, this is unacceptable, and all of us in Congress should be working to ensure that we don't increase taxes on anyone when we're trying to encourage job creation and economic recovery.
Unfortunately, the president refuses to put politics aside and give job creators certainty that their taxes won't be increased in the New Year. On Monday, President Obama called on Congress to raise taxes on individuals making over $200,000 and families making over $250,000. Minority Leader Nancy Pelosi has suggested we raise taxes on those making over $1 million. Some House Democrats want to raise taxes on everyone. It seems like the only thing Democrats can agree on is that they want to raise taxes on hardworking Americans, regardless of the consequences on jobs and the economy.
While my colleagues on the other side of the aisle continue to argue about the size of their preferred tax increase, unemployment continues to stay above 8.2% - where it has been for the last three and a half years of this administration. The president says his plan is "not about taxing job creators," and that it is intended to help job creators, but the Joint Committee on Taxation (JCT) estimates the tax hike under the president's plan would hit about 940,000 small businesses. The National Federation of Independent Business (NFIB) states that, according to the Census, small businesses in the U.S. employ more than 25 percent of the workforce. This means the president's plan could jeopardize a quarter of this country's workforce and further raise our national unemployment rate.
To grow our economy, we must provide tax incentives -- not raise taxes -- on small businesses to ensure their success. In April, with my support, the House passed the Small Business Tax Cut Act. The Small Business Tax Cut Act would allow small businesses with fewer than 500 employees to take a tax deduction equal to 20 percent of their active business income, irrespective of how the small business is organized. This small business tax cut would go straight to the bottom line so small business owners can retain more capital, invest and create more jobs. This legislation would directly and immediately help small businesses create jobs; however, the Senate has yet to act on this bill.
The president says we must have a system that is fair for everyone, and I agree. However, there is nothing fair about the federal government taking between 30 and 40 percent of your income. The fact of the matter is that raising taxes on American families and small businesses will ultimately drive up unemployment and slow economic recovery. I encourage my Democrat colleagues and the president to put politics aside and ensure no one sees their taxes increased to start 2013.