Numbers Don't Lie

Numbers Don't Lie

By: Congressman Lamar Smith

Our economy continues its stellar performance. America has seen 18 consecutive quarters of economic growth.

The tax laws passed by Congress in 2001 and 2003 are paying dividends - literally.

The 2001 Economic Growth Act and the 2003 Jobs & Growth Act reduced the tax burden on working Americans and small businesses. As a result, people have more money in their pockets. That means more money to spend on a new washing machine or new clothes for their children.

Increased demand for goods and services, in turn, puts more people back to work. Over the last three years, the economy has created 5.4 million new jobs. Two million jobs were created in the last 12 months alone. America's unemployment rate stands at 4.6 percent. That's lower than the average unemployment rates of the 1960s, 1970s, 1980s and 1990s.

Tax breaks for small businesses have had the same effect. The 2001 and 2003 tax bills allowed small business owners to keep more of their money. Instead of giving it to the IRS, they can reinvest in their businesses.

This means the owner of the local barber shop has enough money left over at the end of the year to install another barber's chair and hire another worker. "Help wanted" signs are popping up in store fronts - a sign our economy is improving.

American taxpayers aren't the only ones benefiting from the 2001 and 2003 tax laws. Uncle Sam is benefiting as well. Tax revenue increased by 14.5 percent this past year. It's the largest revenue increase in 24 years.

We have a long way to go to reduce the deficit, but the policies of the last five years have helped. This year's budget deficit is now 30 percent below the Administration's February forecast.

It may seem counterintuitive to think that the government can bring in more money by reducing tax rates, but that's exactly what's happening. Fewer people in unemployment lines mean more people paying income tax. And when businesses expand operations, they make greater overall contributions to the tax base.

Unfortunately, the tax policies that created this strong economic growth are not permanent. Many will expire in the coming years. If that happens, millions of Americans will be saddled with a tax increase.

That is why I supported the Tax Relief Extension Act that was signed into law by the President in May. The bill prevents several current tax relief provisions from expiring. The extended provisions affect a wide-range of taxpayers, including middle-income families and small business owners.

One of the most critical parts of the bill is the extension of alternative minimum tax (AMT) protection provisions. This will provide tax relief to approximately 15.3 million taxpayers who otherwise would have been ensnared by the AMT this year.

The bill also extends marriage penalty relief and the child tax credit through 2010. It also provides $200 million in assistance to the families of our military men and women in the form of higher child tax credits and earned income tax credits. Without this legislation, the marriage penalty will creep back into the Tax Code and the child tax credit will drop from $1,000 to $700.

Tax relief translates into good news for our economy - businesses grow, jobs are created, and incomes rise.

The numbers tell real the story. More Americans are working today than ever before. Continued job growth, record homeownership rates, and shrinking budget deficits have made our economy stronger.

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