Congress must act to forestall imminent tax increases
Sep 8, 2010 -
Early in my first term in Congress, I voted in favor of the Jobs and Growth Tax Relief Reconciliation Act of 2003. I supported this legislation during a previous economic downturn, because the best way to stimulate our economy, create jobs, and ultimately grow government revenues is to allow hard-working Americans to take home more of their own money to spend or save as they choose. I believed then, as I do now, that this was an important step in putting Americans back to work and helping to restore growth to our economy. Economists are currently predicting that our nation could slip into a “double-dip” recession and unemployment remains at unacceptably high levels, especially in states like Ohio. Raising taxes on struggling businesses and working American families is the last thing we should consider. Several of the tax cuts enacted as part of the tax relief packages of 2001 and 2003 are set to expire at the end of this year, unless Congress and the President take action.
As we welcome in the New Year at midnight on December 31, 2010, millions of working families, small businesses and farmers can expect to see a substantial tax increase in 2011, unless the current rates are extended. Effective January 1, tax rates are set to rise for Americans in every tax bracket. The top tax rate will increase from 35 to 39.6 percent, and workers in the lowest tax bracket will see a 50 percent increase in their taxes, from 10 percent to 15 percent. The child tax credit will be cut in half, from $1,000 to $500. The marriage penalty, which taxes some married couples at a higher rate than they would pay if they were single, will return in 2011.
Taxes on dividends and capital gains will increase dramatically, from 15 percent to 39.6 percent. This tax hike would have a significant impact on small businesses, which have accounted for 64 percent of new jobs in the private sector over the past 15 years. Many senior citizens rely on income from stock dividends to help supplement their retirement income. Instead of raising taxes on investment income, we should adopt policies that will help small businesses grow, prosper, and create jobs for the millions of Americans who are seeking work.
The New Year will also see the return of the estate tax, commonly known as the “death tax." This tax has been particularly burdensome for farmers and small businesses because most have the entire value of their businesses and farms in their estates. The death tax is assessed at the worst possible time, when families are grieving the loss of a loved one, and many are forced to sell their businesses or farms to pay this unfair tax. Hard-working families already pay their fair share of taxes to the federal government during their living years; it is simply wrong to tax them again when they die.
The death tax took a long holiday this year thanks to the tax relief Congress passed in 2001, calling for a gradual phase-out of the death tax and its elimination in 2010. The legislation contained a “sunset clause,” which meant that unless Congress acted, the death tax would return in 2011 to its previous level in 2002. I have cosponsored legislation (HR 205) that would make the repeal of the death tax permanent.
I have consistently supported legislative efforts to reduce the tax burden on families and small businesses, and help American workers keep a larger share of their hard-earned income. I look forward to joining my colleagues in a bipartisan effort to extend the tax rates at their current levels, to forestall a major tax increase that could further impede our economic recovery.
Congressman Michael R. Turner represents Ohio’s Third Congressional District.