Congressman Lamar Smith (TX-21), Chairman of the House Judiciary Committee, today voted to extend current income tax rates for one year for all Americans. Tax relief enacted in 2001 and 2003 is scheduled to expire at the end of this year. The Job Protection and Recession Prevention Act of 2012 (H.R. 8) extends for one year the Bush-era tax cuts to prevent significant tax increases on middle class Americans at the end of this year.
The bill passed the House of Representatives by a vote of 256-171. According to the Heritage Foundation, if the current tax rates are allowed to expire, citizens of the 21st District of Texas will see an average increase per tax return of $5,152 starting in 2013.
Chairman Smith: "America faces a national debt crisis because the federal government has spent too much, not because Americans are taxed too little. Tax rates have remained stable for the last ten years following the enactment of meaningful tax relief for the middle class under the Bush administration. Meanwhile, over the past five years, government spending has increased by nearly 40%.
"America now borrows 42 cents for every dollar it spends. This is the road to insolvency. But the solution is not more taxes on the American people, it's less government spending.
"The President's policies have failed to spur our economy, failed to create more jobs, and failed to stop the federal government's spending spree. The Job Protection and Recession Prevention Act extends much-needed tax relief for all Americans for one year.
"This short-term fix ensures that American families are not faced with a massive tax hike at the end of the year. But more work still needs to be done to reduce the deficit, cut government spending, and promote sound fiscal policies for future generations."
Background: H.R. 8 extends through December 31, 2013, the current individual income tax brackets of 10 percent, 25 percent, 28 percent, 33 percent, and 35 percent, which are set to expire at the end of calendar year 2012.
The below chart from the Wall Street Journal citing a Congressional Budget Office study shows the tax rate for American taxpayers. The top 20% of income earners (over $74,000) pay nearly 70% of all federal taxes. Despite the disproportionate tax burden they bear, under President Obama's tax plan, these wage earners will see an increase in their tax rate starting January 2013.