U.S. Senator Roger Wicker (R-Miss.) on Wednesday voted to extend the current tax rates for all Americans, preventing the largest tax increase in the nation's history. However, the vote on the Tax Hike Prevention Act of 2012, S.3413, failed, 45-54. Rates that were put in place in 2001 and 2003 are set to rise on Jan. 1, if Congress and the President fail to act.
Wicker opposed a competing proposal offered by Senate Democrats, the Middle Class Tax Cut Act, S.3412, which would raise taxes on small businesses and families above a $250,000 threshold. The bill also would allow the death tax to increase to 55 percent on estates over $1 million, potentially forcing many family farms and small businesses to liquidate or declare bankruptcy after the death of a loved one. The measure passed, 51-48, but Republicans in the House are expected to block it.
"The American people expect leaders in Congress to come up with a solution," said Wicker. "Raising taxes while our economy is struggling is not a solution. Just three years ago, President Obama stated higher taxes were not the right policy in a recession. The uncertainty caused by continued threats of raising taxes by Senate Democrats and the President puts a wet blanket on job creation. The most important thing we can do right now to help the economy and the millions of people struggling to make ends meet is prevent tax hikes from hitting Americans and small businesses."
The tax rates that were initially passed in 2001 and 2003 include an increase to the child tax credit, educational tax credits, a reduction of the marriage penalty, and incentives to save and invest. If an agreement cannot be reached, taxes would go up by over $300 billion in 2013 alone. The Heritage Foundation found that Mississippians' tax bills would increase by an average of $2,197 next year.
A recent study from the accounting firm Ernst & Young reports the President's misguided plan to let the current tax cuts lapse for high-income rates would impact small-business owners and cost more than 700,000 jobs.
Congress last extended the current rates in 2010. That two-year extension expires on Jan. 1.
Wicker spoke on the Senate floor on Wednesday about the harmful effect of increasing the death tax, which can be seen here. He also authored this column calling for extending the current tax rates to provide certainty for the economy.