WASHINGTON - American families are feeling the crunch of spiking energy costs, runaway college tuition, ever-burdensome home mortgages and steadily rising prices for consumer goods.
These and other cost-of-living increases are eating away at the family budget — making every dollar earned and saved even more valuable. The very last thing families need is to see more of their paycheck confiscated by Congress.
Unfortunately, the U.S. House that already has passed $100 billion in tax increases this year to pay for bigger government and wasteful pork thinks otherwise. Last week, led by the Ways and Means Committee chairman, Rep. Charlie Rangel, D-N.Y., congressional Democrats unveiled a breathtaking proposal: the single largest tax increase in American history.
It’s not often that we can speak in such absolute terms, but in this case, there is no way around it. Dubbed the “Mother of All Tax Bills” by Rangel and embraced by House Speaker Nancy Pelosi, D-Calif., who told reporters last Thursday that she “certainly” supports the tax increase, this monstrosity would raise taxes on everyone: from the very poor to the very rich and everyone in between.
Indeed, with a price tag of $1.3 trillion — yes, that’s “trillion” with a “t” — the Mother of All Tax Bills is actually more like the Mother of All Tax Hikes. And to make matters worse, the Pelosi-Rangel plan kills tax cuts enacted by Congress in 2001 and 2003, making it a $3.5 trillion tax hike in total. Could the news get any worse for American families, farmers, small businesses and other job providers? Not likely.
So what exactly will the Pelosi-Rangel tax increase mean for families?
The most striking feature of the Mother of All Tax Hikes is that it raises taxes on literally every single taxpayer. In 2001, the Republican-led Congress and the president enacted a sweeping tax cut plan that lowered taxes for every American.
The Pelosi-Rangel plan would eliminate those tax cuts, raising taxes for every single tax bracket and eliminating the new 10 percent rate Congress established specifically to reduce the tax burden on low- and middle-income working families.
And as if that is not enough, the Pelosi-Rangel plan also would reinstate the marriage penalty, which — before Congress began to phase it out in 2001 — punished couples by taxing them at a higher rate than they would have been taxed had they filed individually. Indeed, no family would be protected from the Mother of All Tax Hikes.
How about small businesses, farmers and other job providers?
To begin, the Pelosi-Rangel tax increase would bring the death tax back to life. Since 2001, the death tax — one final bill from Uncle Sam, demanding that the deceased pay a tax on property left behind — has been gradually phased out until its elimination in 2010.
Rather than permanently killing the death tax, however, the Pelosi-Rangel plan revives it. The death tax is particularly harsh on small businesses and family farms, and by bringing it back, Congress is placing a target squarely on the backs of these critical job providers.
That’s because resources that could be used to expand a business or hire new employees are instead used inefficiently to plan for the effect of the death tax. In fact, the Heritage Foundation estimates that the tax costs our economy between 170,000 and 250,000 jobs annually.
Small businesses would not only suffer the effect of the death tax, but many also would be hit with a new “surtax” on top of standard taxes already paid to Washington and would lose a key manufacturing tax deduction that reduces their annual tax bill.
Indeed, for businesses large and small, under the Pelosi-Rangel plan, our nation would be placed at a competitive disadvantage against global counterparts that have fairer, simpler tax structures.
And the record job creation we have seen over the past four years — 8.1 million new jobs since August 2003 — would be brought to a screeching halt. Simply put, the Pelosi-Rangel tax increase would be a job killer.
There is a better way. Instead of raising taxes on already overwhelmed families and small businesses, Members of Congress of both parties should work together to permanently repeal the onerous alternative minimum tax, make the 2001 and 2003 tax cuts permanent and make the tax code fairer and simpler.
Republicans stand ready to work with our counterparts in the majority to both strengthen our economy and protect family budgets.