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Mr. JOHANNS. Madam President, I come to the floor to discuss a wholly predictable and foreseeable economic disaster. I ask why the Senate continues to waste valuable time while we continue barrelling toward a fiscal cliff.
In a little more than 5 months, the current tax rates are scheduled to expire for every single American, resulting in the largest tax increase in history.
It is hard to imagine this massive tax increase is what the President wants. Just 2 years ago, he warned that we absolutely should not raise taxes in a poor economy. Yet today the economy is actually in worse shape.
So what does the President do? He calls for raising taxes on job creators, on small business owners filing as individuals, on investment income, on all those things that actually drive economic prosperity and hiring.
Their favorite talking point claims that all those making more than $250,000 should just be taxed more. While those families reporting income of more than $250,000 may only make up about 2 percent of all tax returns, it is these citizens who are the owners of small businesses that employ 25 percent of America's workforce. These are the same small business owners that created two-thirds of the net jobs in the last decade.
I hear from small business owners in Nebraska every day, and they tell me if faced with a more expensive tax bill, they will be forced to cut costs elsewhere.
In fact, according to the global accounting firm Ernst & Young, the Democrats' tax plan would result in 710,000 fewer jobs compared to simply keeping the current rate the same for all Americans.
The economic wreckage resulting from the tax hike doesn't stop there. In the same study, Ernst & Young estimates these reckless policies will drive wages of hardworking Americans down by 1.8 percent.
Furthermore, investment is estimated to decrease 2.4 percent as the tax on dividends increases. Well, what is apparent here? What is apparent is that less investment means less economic activity, which means fewer jobs, and it is really that straightforward. It is really that simple.
The President and the Senate Democrats apparently disagree over just how much to increase our taxes on dividend income. It is one of the few areas where their plans are not in lockstep, but both plans increase the dividend tax rate nonetheless. While their rhetoric continues to lambaste the ultrawealthy, make no mistake, this tax increase will affect the vast majority of the middle class. When examining historical IRS data, it is revealed that 68 percent of all tax returns showing dividend income are from those Americans with incomes below $100,000.
While adding insult to injury, the President has proposed to increase taxes on the estate of deceased loved ones as well. My friends on the other side of the aisle not only pick up the President's proposal but they make it worse. Believe it or not, they want to tax even more estates at even higher rates than the President. It is astonishing, and unfortunately this reversal on the death tax will disproportionately impact agricultural States such as Nebraska.
In their opposition to the Democratic bill, the Nebraska Farm Bureau and the Nebraska Cattlemen state that allowing the estate tax exemption to fall to $1 million would subject the typical full-time farm or ranch to the increased estate tax rate of--get this--55 percent.
Madam President, I ask unanimous consent that the letters from these two groups be printed in the Record.
There being no objection, the material was ordered to be printed in the Record, as follows:
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Mr. JOHANNS. According to the Tax Policy Center, the Senate Democrats' estate tax plan would hit over 48,000 estates with a $40.5 billion tax bill compared to an extension of the current rates. While an extension of current estate tax rates is not perfect--I believe it should be repealed permanently--it is far better than putting over 48,000 families, a large percent of them farmers and ranchers on the death tax rolls. I have said over and over again that death should not be a taxable event. Families should not have to sell the family business and lay off their employees to pay Uncle Sam a 55-percent tax rate on the value of the estate.
All of these ill-advised tax policies taken together add up to bad news for our economy and our country, bad news for our workers, and bad news for every American. The National Federation of Independent Business estimates that the tax increases would result in a U.S. economy that is 1.3 percent smaller than it is today, and that is an outcome for which none of us should strive.
So what is the alternative? Just last week the senior Senator from Washington laid out the Democrats' plan if they don't get their way on raising taxes: Hold the economy hostage and go over the fiscal cliff; make sure everybody's taxes go up by the largest amount in the Nation's history; let the $110 billion sequester for this year strip our military of the resources it needs to keep us safe and impact domestic programs; let the alternative minimum tax wreak havoc on our middle class, with the exemption actually falling below the median household income.
In Nebraska alone, the nonpartisan Congressional Research Service estimates for 2012 there will be over 134,000 potential AMT tax returns compared to 16,000 in 2009. All told, this fiscal cliff will cost us between 3 percent and 5 percent of our entire gross domestic product, trillions of dollars in destroyed wealth, and a CBO-predicted economic recession. That is the plan, and it is astonishing to me that the Democrats would go to these lengths just to raise taxes on our country's economic engine.
My friends on the other side of the aisle will claim that taxes must be raised to address the mammoth deficit. Make no mistake, attacking our deficit should be job No. 1. However, on actual analysis we see that the Democrats' claim is nothing but a mirage. According to the nonpartisan Joint Committee on Taxation, the difference between the Democrats' plan to increase taxes and a simple extension of all the current tax rates is not even enough to cover 5 days of our government spending. It is only three-tenths of 1 percent of our crushing $16 trillion national debt. This simply is not about our national debt or about deficits; it is about an ideological statement and nothing more.
After today's failed vote on these tax increases, it is my hope that we can get together and practice some common sense. Common sense would tell me, let's not raise taxes in a struggling economy. That used to be the President's position before he was up for reelection. Let's not punish our job creators and small business owners, let's not punish our senior citizens and other savers who rely on dividend income, and let's not hinder passing down family farms and ranches from one generation to the next. Let's extend the current rates for as long as it takes to get to work on comprehensive tax reform and actually solve the problems of our Tax Code. Let's get serious and start working on the business that Americans sent us here to do. A massive tax increase will drive our economy to its knees and bring about another recession. We can't afford that.
I yield the floor and suggest the absence of a quorum.
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