Sen. Mike Johanns (R-Neb.) today opposed legislation supported by Senate Democrats to increase the tax rates paid by many small businesses and allow the death tax to return to 1990's rates, impacting family farms and ranches in Nebraska. This bill passed largely along party lines.
Johanns also voted to support separate legislation extending the current income and estate tax rates as well as patching the Alternative Minimum Tax (AMT). This bill, which Johanns sponsored, did not receive the required votes necessary for passage.
"Common sense tells us raising taxes in a weak economy is counterproductive and will do nothing to help working families, small businesses, senior citizens, and farmers and ranchers," Johanns said. "A massive tax increase like this one will only force our economy to its knees and bring about another recession. Luckily, this tax hike is dead on arrival in the House of Representatives. Now it's time for Congress to extend the current rates and renew our efforts on comprehensive tax reform."
The Johanns supported legislation was introduced by Senate Republican Leader Mitch McConnell (R-Ky.) and Sen. Orrin Hatch (R-Utah). It extends the current income and estate tax rates, and also patches the AMT. Without adjusting the AMT, this tax will impact nearly 135,000 Nebraska households earning as little as $33,750 a year according to the Congressional Research Office.
The Democrats' tax increase would have resulted in tax hikes on approximately 940,000 businesses -- including many small businesses -- classified as flow-through businesses, according to the Joint Committee on Taxation. The National Federation of Independent Businesses estimates nearly a quarter of the American workforce is employed by businesses impacted by this proposed tax hike. A study released this week by Ernst and Young estimated the tax hike proposed by Senate Democrats would result in 700,000 fewer jobs and lower wages for American workers.
On the death tax, the Democrats' legislation remains silent, which allows the tax to return to 55 percent with a $1 million exemption. This increased rate would impact family-owned ranches and farming operations.
Both the current and former Senate Budget Committee chairmen, Sens. Kent Conrad (D-N.D.) and Pete Domenici (R-N.M.), and Alice Rivlin, budget director under President Bill Clinton, have said all current tax rates should be extended while Congress works to reform the current tax code.
When signing a two-year extension of current tax rates in 2010, President Obama said it was a bad idea to raise taxes in a struggling economy. Our economy, as measured by our nation's Gross Domestic Product, is actually growing at a slower pace now than it was in 2010.