Commentary: Stop the biggest tax hike in American historyFriday’s report from the Commerce Department shows that growth of U.S. gross domestic product sank to 1.5 percent in the second quarter of 2012.
By: John Kline, The Republican Eagle
Friday’s report from the Commerce Department shows that growth of U.S. gross domestic product sank to 1.5 percent in the second quarter of 2012 – similar to the growth rate in 2009 when the president said, “You don’t raise taxes in the middle of a recession.” Yet now, the president and Senate Democrats want to raise taxes on hundreds of thousands of small businesses – a tax hike that would destroy more than 700,000 jobs.
At a small business roundtable meeting I hosted in Eagan on Friday, a Rosemount businesswoman summed up the uncertainty working families and small businesses are facing this way: “The tax environment is very scary right now.”
At the forum, I heard the views and concerns from several constituents and small business owners from around the district. While their personal stories differed, their frustrations with the current economic climate and uncertainty caused by Washington were universal:
• “Why does the administration ‘demonize’ small business owners?” – Faribault
• “The tax burden is so onerous, lowering the tax rate would help my business.” – Savage
• “I don’t like the divisive politics of President Obama’s tax ideas.” – Northfield
• “When I started a few years ago, I wish I would’ve known about all the taxes you pay as a small business owner.” – Burnsville
When the clock strikes midnight on Dec. 31, 2012, the tax relief policies enacted in 2001 and 2003 – and once extended with the support of Democrats in Congress and President Obama – are again scheduled to expire.
That is why the House this week is scheduled to stop the largest tax increase in American history. In addition to providing relief from the uncertainty of these looming tax increases, this would also establish a path toward enacting comprehensive tax reform next year that levels the playing field for hardworking Minnesotan and American taxpayers and businesses large and small trying to compete in a global economy.
A look at how these taxes would affect Minnesota families and seniors:
• A family of four earning $50,000 per year could pay almost $2,200 in higher taxes (a five-fold increase in their tax liability).
• A single mom earning $36,000 per year could pay more than $1,100 in higher taxes (nearly doubling her tax liability).
• The child tax credit will be cut in half, from $1,000 to $500 per child, increasing the taxes of 31 million families an average of $1,028 next year.
• The marriage penalty in the standard deduction and the 15 percent bracket will be reinstated, increasing taxes for 32 million married couples by an average of $591.
• The 10 percent bracket will be eliminated, raising the lowest tax rate to 15 percent, increasing taxes for 88 million taxpayers by $502 next year.
Impending tax increases on capital gains and dividends – detailed below – will hit seniors particularly hard. Seniors will not only face higher taxes realized capital gains and dividends, they will also see a decrease in the values of the stocks – whether held directly, through taxable mutual funds, or tax-advantaged IRAs and 401(k)s – upon which they rely to supplement their Social Security benefits.
• Married senior citizens earning $40,000 per year could pay nearly $1,700 in higher taxes (more than doubling their tax liability).
• The 10 percent bracket will be eliminated, raising the lowest tax rate to 15 percent and increasing taxes for 88 million Americans – including every senior who pays income taxes – by an average of $502 according to the non-partisan Joint Committee on Taxation.
• The tax rates on capital gains and dividends will rise significantly, imposing an average tax hit of $1,700 on 9 million seniors according to new Joint Committee on Taxation data.
• The death tax will be reinstated with rates as high as 55 percent.
Now more than ever, Minnesota families and businesses should be allowed to keep more of their hard-earned money – the less money kept by individuals and job creators, the slower our economic recovery.
Accordingly, Congress must work toward creating an environment that helps families by preserving tax relief and providing economic certainty so private sector employers can create jobs and put some of the 13 million unemployed Americans back to work.