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Public Statements

The Hill - January Tax Increase More Than Just Peanuts

Op-Ed

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By Representative Erik Paulsen

Remember the Peanuts cartoon strip where Lucy tells Charlie Brown that she'll hold a football while he kicks it? Charlie Brown refuses at first, not trusting Lucy. But, then Lucy would say something to persuade Charlie Brown to change his mind. And every time Charlie Brown would sprint to kick the ball, Lucy would pull the ball away, sending Charlie Brown flying into the air, landing on his back with a thud. The comic ends with Lucy pointing out to Charlie Brown that he never should have trusted her in the first place.

What if Lucy had pulled the ball away well before Charlie Brown went in for the kick? What if Charlie Brown had seen the gag coming? What if he could have stopped sprinting in time?

On January 1st, American families and job creators will have the ball pulled out from under them when nearly $300 billion in tax increases enter into effect.

If current tax rates, which were enacted in 2001 and 2003 and extended on a bipartisan basis in 2010, are allowed to expire at the end of this year, what will American families and small businesses wake up to on January 1st, 2013?

The enormity of what will hit this nation as we ring in the New Year is staggering. If Washington pulls the football out from the American people on January 1st, every American will be laying on their back, looking up at higher taxes. A single mother earning $36,000 per year would pay more than $1,100 in higher taxes, and a family of four earning $50,000 per year would have to pay almost $2,200 in increased taxes -- a five-fold increase in their tax liability.

Families will see the marriage penalty go back into effect, the highest federal rate on dividends will increase from 15% to more than 43%, the value of the child credit will drop from $1,000 to $500, and we'll see an additional 0.9% increase in the payroll tax for Medicare. All this at a time when nearly 12.7 million Americans remain unemployed and the government presses forward with massive new spending in order to enact the president's ill-conceived healthcare law.

Recently, I spent time visiting a family-owned small business employing 85 people in our community. This Minnesota job creator told me point blank that if January rolls around without a solution, and the tax hike goes into effect, it will drastically hurt their ability to grow, expand, and hire new employees.

The tax hike the administration is proposing, would apply to half of all small business income in this country, threatening nearly 940,000 small businesses and, according to a recent Ernst & Young study, costing 700,000 American jobs -- 14,000 in Minnesota alone.

Some in Congress and the Administration say letting the tax rates expire will not have a detrimental effect on our fragile economic recovery. But, Federal Reserve Chairman Ben Bernanke recently testified before Congress on the dire consequences of not dealing with this looming "fiscal cliff".

And, unlike Charlie Brown, the American people know better. Americans get it. They see the gag for what it is. Sadly, according to a recent national survey, more than half of the American people believe their taxes will increase in the coming year, negatively affecting their pocketbooks and family budgets. And, with virtually no difference in these views by household income, we can all see the government about to pull the football out from under American families and job creators.

Congress must work in a bipartisan way to ensure these destructive tax hikes on American families and job creators are averted. The House will vote prior to the August recess on legislation to stop the tax hike while also establishing a pathway toward comprehensive tax reform -- sending a clear signal to families, employers, and the financial markets that taxes will not go up on January 1, 2013.

Most importantly, we need to reform our broken tax code to make it fairer, simpler and more competitive. We need to spur job creation here in America, rather than forcing American innovation and jobs overseas. We need to put taxpayers ahead of special interest carve outs and loopholes.

The answer to our weak economy is not to take more money from Americans and grow the size of government -- the answer is to grow the economy and put American families and job creators first.

It's time to put the partisan posturing aside, and work towards meaningful tax reform so U.S. entrepreneurs and job creators can expand, grow, and hire. By working together we can ensure that on January 1st, Lucy doesn't get the best of Charlie Brown, yet again.


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