As we enter the new legislative year, the possibility of the largest tax increase in our nation's history looms large over Capitol Hill. Last year, Charlie Rangel (NY-15), Chairman of the powerful tax-writing Ways and Means Committee, unveiled his massive tax overhaul legislation. The proposal quickly became dubbed the "mother of all tax hikes."When Chairman Rangel proposes legislation that would increase taxes on Americans by $1.3 trillion, there can be no mistake about the difference in governing philosophy between the two parties in Congress. The truth is, most Democrats in Congress would like to grow the size, sphere, and influence of government in the lives of the American people, and that requires funding. In order to pay for this expansion of government, they have proposed to increase taxes.
Chairman Rangel claims his plan will cut taxes for some and raise taxes for others. This is factually true, but the bottom line cannot be ignored: a $1.3 trillion tax increase on the American people.
The most troubling aspect of the proposal is that it will phase out the tax cuts from 2001 and 2003. These provisions need to be renewed or made permanent by 2011. Instead, Rangel's plan allows these cuts to expire.
These tax cuts help everyone. They include: a reduction in income tax rates for all taxpayers, marriage penalty relief for most middle class taxpayers, a phasing out of the death tax, a doubling of the child credit, an increase in the adoption tax credit, and tax breaks for education expenses.
At a time when our economy is facing a slowdown and a possible recession, we need to be even more vigilant in keeping as much money in the hands of those who earned it and know best how to spend it.
I strongly oppose any tax proposal that cancels the tax cuts of 2001 and 2003. We must make them permanent. Given the opportunity I will vote in favor of legislation that would do just that. However, it is not enough to simply rebuke irresponsible tax increases; we also need alternate policies that will accomplish what the economy needs right now and there is a bill in Congress that would do just that. In light of the state of the economy, I have cosponsored legislation that will instead cut taxes on those most likely to create economic growth and new jobs.
The piecemeal actions some have advocated will not help our economy. Neither will huge tax increases of the kind Congressman Rangel is proposing. What we need are permanent actions that will fire the engine of the economy and create more jobs, opportunities, and income for everyone. The best way to help people find higher paying and more rewarding jobs is to motivate and empower the people who create those jobs.
The Economic Growth Act of 2008 (H.R. 5109) is aimed not just at stimulating the economy in the near term, but also at growing the economy in the long term. The bill would allow all businesses to immediately expense the costs of assets they purchase for their business. This provision will encourage businesses to purchase the assets needed to grow.
The bill would immediately cut the top corporate income tax rate from 35 percent to 25 percent. The United States has one of the highest corporate income tax rates in the world; a reality that makes it difficult for American firms to compete and create jobs here at home. Bringing the rate to 25 percent would align it with the average rate in the European Union. By allowing businesses to keep more of the money they earn, this provision would encourage the expansion of businesses, the hiring of more workers, and an acceleration of investment, while making American companies more competitive internationally.
The bill would also adjust the capital gains rate for businesses to 15 percent. Under current law, individuals pay a top capital gains rate of 15 percent, but corporations are subject to a 35 percent top rate. By encouraging corporations to sell unwanted assets, this provision would unleash funds and materials with which to create jobs and grow the economy.
This is not the time to be considering legislation to raise taxes on the American public. Instead, I am advocating a responsible tax policy that provides the frame-work for a stronger economy.
U.S. Congressman Joesph Pitts represents the 16th legislative district.