When Congress returns to Washington in September, it needs to do more than hold a few political posturing votes before going home to campaign. Even if a continuing resolution to fund government is passed as expected, there are still serious unresolved issues that should not be left for an unaccountable lame-duck session. Not only should Congress act to avert the toxic brew of tax hikes coming at the end of the year, but it should also act to check lame-duck regulatory abuses by the Obama administration.
A massive $494 billion tax hike is coming on January 1. Reversing the Bush tax cuts amounts to a $166 billion tax hike including higher income tax rates, smaller child credits, and the return of the marriage tax penalty. The end of Obama’s payroll tax holiday will pile another $125 billion on everyone who works. The Alternative Minimum Tax will slam millions of middle-class families to the tune of another $119 billion. The death tax will jump from 35 percent of everything above $5 million to a whopping 55 percent of everything above $1 million at a cost of $13 billion. Other expiring tax cuts will total about $50 billion, and new tax hikes from Obama’s health care law will add another $22 billion.
These are not the usual ten-year estimates used in policy debates. These are one-year, immediate 2013 tax hikes that total an astonishing $494 billion. More than enough to tip the U.S. economy back into recession, perhaps sharply so.
Economist Don Luskin projects that the dividend tax hike alone – slated to go from 15 percent to 43.4 percent with the expiration of the Bush tax cuts and the new Obama health care surtax – could knock 30 percent off the stock market. Seniors who rely on dividend income will be hit especially hard.
Tax hikes of such a frightening size are never a good idea, but are especially foolish in what’s now widely recognized as the weakest economic recovery in the post-war period. Democrats should drop their class-warfare stance that insists on holding the U.S. economy hostage over tax hikes for upper income earners and business owners and agree to stop all of these tax hikes for at least one year.
The regulatory threats in a lame duck period are similarly frightening, starting with a pending greenhouse gas regulation that would effectively prohibit new coal-fired power plants and create the predicate for litigation that would shut down existing coal plants, cementing as Obama’s legacy his promise to bankrupt coal and make electricity prices skyrocket.
Phil Kerpen is president of American Commitment, a columnist on Fox News Opinion, chairman of the Internet Freedom Coalition, and author of the 2011 book Democracy Denied.
American Commitment is dedicated to restoring and protecting America’s core commitment to free markets, economic growth, Constitutionally-limited government, property rights, and individual freedom.
Washingtonian magazine named Mr. Kerpen to their "Guest List" in 2008 and The Hill newspaper named Mr. Kerpen a "Top Grassroots Lobbyist" in 2011.
Mr. Kerpen's op-eds have run in newspapers across the country and he is a frequent radio and television commentator on economic growth issues.
Prior to joining American Commitment, Mr. Kerpen served as vice president for policy at Americans for Prosperity. Mr. Kerpen has also previously worked as an analyst and researcher for the Free Enterprise Fund, the Club for Growth, and the Cato Institute.
A native of Brooklyn, N.Y., Mr. Kerpen currently resides in Washington, D.C. with his wife Joanna and their daughter Lilly.