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Column: Heading off a Massive Hike
Heading off a massive hike
By Scott Tipton & Tom Price
For 42 straight months, the unemployment rate in America has been at or above 8 percent.
Millions of families are struggling. America’s small businesses — which create the majority of jobs in America — lack the confidence and certainty needed to invest, grow, and hire.
In the presence of this dismal economic recovery, amazingly, there is an ongoing debate about whether or not the nation should be forced to endure a massive tax increase on Jan. 1, 2013.
If no action is taken, marginal tax rates on families and small businesses will rise in the new year. Rates on investment and dividend income will rise dramatically. The estate tax — known as the “death tax” — will rise to 55 percent from 35 percent. If all the tax rates are allowed to go up, middle-class families could see their taxes increase by thousands of dollars.
For Republicans, there is an easy answer: stop the tax hike. That is why a majority in the House of Representatives voted at the beginning of August to extend all current rates for one year and use that temporary window to press forward and pass comprehensive tax reform in 2013. You would think such a plan would garner support from Democrats and President Barack Obama. Unfortunately, that’s not the case.
Despite a lack of jobs and economic certainty, the president and congressional Democrats have been traveling the country saying we should not extend all the tax rates. They insist that during one of the weakest economic recoveries on record, the right thing to do is to increase taxes on nearly one million small businesses. Their strategy consists of raising taxes for over 50 percent of small business income in America and sending more hard earned money to Washington.
America’s job creators already face a slew of challenges. The threat of higher taxes only increases the uncertainty inherent in building any new business or starting a new enterprise. Therefore, we must get rid of any possibility of higher taxes in 2013 and get to work on the other side of the coin in this tax debate: the desperate need for tax reform.
The current tax code costs Americans over $100 billion and 6 billion hours of paperwork annually. What a tremendous waste of time and resources! We need comprehensive tax reform that will simplify the code, lower rates, broaden the base, and eliminate loopholes. With the highest corporate tax rate in the industrialized world, how can we expect to keep and bring more jobs to American shores if we have a tax environment that isn't competitive in the global economy?
In the House of Representatives, we have voted three times this Congress on a principled tax reform plan — twice in our annual budget proposals and most recently in the beginning of August as part of a plan that sets forth deadlines and benchmarks for tax reform in 2013. Our proposal would lower marginal rates, get rid of the Alternative Minimum Tax, and move to a territorial tax system that is competitive with the rest of the world. We would eliminate special-interest loopholes so politicians are not allowed to use the tax code to pick winners and losers in the economy.
With near stagnant economic growth and great uncertainty, it is imperative that we stop the looming tax hikes on families and job creators immediately. Then we should move in a deliberate fashion to fix our broken tax system so that we unleash the spirit of free enterprise in America and create true opportunity and prosperity.
U.S. Rep. Scott Tipton, R-Colo., represents the Third Congressional District. He co-authored this essay with Rep. Tom Price, R-Ga., chairman of the House Republican Policy Committee.