Without action, every American taxpayer will see their taxes increase effective January 1 when low-tax policies established in 2001 and 2003 expire. The tax hike would take $384 billion out of the economy in 2013 alone and, according to an independent study, cost 710,000 jobs.
Just two years ago, President Barack Obama said these same tax increases would "have the effect of fewer jobs" and that preventing them was the "right thing to do for our economy." A growing chorus -- including former President Bill Clinton and President Obama's former National Economic Director Larry Summers -- argues that the same logic should hold true today.
"Our economy is teetering right now and cannot afford a massive tax increase from Washington," said Congressman Jack Kingston (R-GA), who voted with a bipartisan majority to prevent the tax hike. "A tax increase does not encourage a small business owner to expand or a family to go out to dinner. This isn't rocket science. The House has come together on a bipartisan basis to extend this tax relief and I would urge the President and Senate to join us."
The tax increase would be especially hard on families. In addition to income tax increases, it would reinstate the marriage penalty and cut the child tax credit in half. A family of four earning $50,000 annually would see a five-fold increase in their taxes.
Small businesses would also be hit hard. The income tax increases would impact 95 percent of all businesses and 46 percent of all business income in the country. In addition, they would see a sharp reduction in expensing limits which encourage investment in equipment. A steep uptick in the Death Tax would hurt businesses as well as family farms.
Low income Americans would also suffer as the increase would eliminate the lowest tax bracket, increasing their tax burden from 10 percent to 15 percent.
"This tax increase is a ticking time bomb for every American taxpayer," said Kingston. "Letting it hang out there is chilling on business and tantamount to holding the American economy hostage."
The House's effort to prevent the tax increase, the Job Protection and Recession Prevention Act (HR 8), passed with bipartisan support in a vote of 256-171. It now stands waiting for Senate action.