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Orange County Register - Tax Deal a Win, Not a Compromise


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By Representative Ed Royce

Republicans do not take control of the House until January, but, given recent events, it is clear the November elections are already impacting our nation's capital. Conservatives, for instance, were on the receiving end of two major victories last week, a rarity in recent years. The first was killing a $1.1 trillion pork-filled omnibus bill that would have funded our oversized government for one more year. Late into the night, Senate Majority Leader Harry Reid, D-Nev., was forced to pull this budget-buster because a united GOP minority refused to continue business as usual.

The second victory came in the form of the tax package passed by the House on Thursday and signed the next day by the president. While some have tried to label this as a "compromise" between Republicans and the president, the truth is that it was a clear GOP victory at time when the Senate and administration remain under Democratic control. As Dan Mitchell from the libertarian Cato Institute said, "This is good news for investors, entrepreneurs, small-business owners and ... taxpayers who were targeted by Obama. They get a reprieve before there is a risk of higher tax rates."

The vehement opposition from the left also signals a win for the GOP. Liberal talk-show host Ed Schultz called the president "the capitulator in chief" for caving to Republican demands. Sen. Bernie Sanders, the only self-proclaimed socialist in the Senate, said it was an "insult" and an "outrage," and it was "absolutely wrong" of the Democrats to cave.

What was in this bill that is driving the hard left over the edge? It prevented one of the largest tax increases in U.S. history from going into effect Jan. 1. The top income tax rate would have jumped from 35 percent to 39.6 percent; the lowest rate would have gone from 10 percent to 15 percent and all rates in between would have jumped. Taxes on capital gains were set to rise from 15 percent to 20 percent and dividend taxes from 15 percent to 39.6 percent. For those small-business owners and family farms, the estate tax was going to rise from zero this year to 55 percent rate on estates over $1 million.

Had this GOP victory fallen apart, millions of small businesses would have seen higher taxes along with the hundreds of new mandates and regulations called for under Obamacare. Given the sorry state of our economy, that was not a risk we could take. Unemployment nationally remains stuck near 10 percent, the housing market continues to struggle (with most estimates putting a recovery years away), and in Europe we see riots in the streets as governments deal with anemic growth and bloated debt burdens. Poll after poll tells us the No. 1 reason businesses are not growing is the fear of increased taxes and new regulations. Failing to deliver this package would have compounded this problem and led to an even greater contraction in terms of job creation and economic growth.

Had this deal fallen apart, it would also have allowed the president to go back on his promise, take a harder stance on taxes and reconnect with his leftist allies. For some on the hard left, the expiration of the lower tax rates was a dream within reach. Their goal is a tax code even more progressive than it is now. "From each according to his ability, to each according to his needs" isn't just a saying coined by Karl Marx; it is a central ideal that drives the hard left.

Getting a bill out of a GOP-controlled House next year that could garner 60 votes in a Democratic controlled Senate would have been virtually impossible given the growing opposition on the left; all the while small businesses and taxpayers would have suffered.

We chose to provide taxpayers and businesses a modicum of certainty. Now we can turn our attention to implementing a pro-growth agenda and slashing the federal government.

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