“I personally don’t believe we ought to be raising taxes.”
“You don’t raise taxes in a recession, which is why we haven’t, and why we’ve instead cut taxes. So I guess what I’d say is … you don’t raise taxes in a recession.”
“The real risk to this economy is on the side of slowdown…and that means we’ve got to make sure that we don’t take gasoline out of the tank at the end of this year.”
If you thought these quotes regarding the extension of the current tax rates were from a Republican, I wouldn’t blame you. But in reality, they’re from former President Bill Clinton, President Barack Obama, and former economic adviser to the Obama Administration, Larry Summers.
The debate centers around what to do with the 2001 and 2003 tax rates, first passed under President George W. Bush, and fully extended in 2010 for two years by President Obama, with the support of 91 sitting House Democrats and 39 Democratic senators.
The uncertainty over these tax rates, which expire at the end of the year, has paralyzed small businesses and private investment, and slammed the brakes on private-sector job creation.
President Obama announced he supports tax increases on everyone who makes $250,000 or more. He advocates increasing taxes to the same levels they were under former President Clinton, a position even Clinton himself doesn’t support.
President Obama claims his tax hike only affects three percent of Americans. But according to the nonpartisan Joint Committee on Taxation, that translates into nearly one million of the most profitable small businesses across the country that are in a position to grow and hire. These tax increases would hit more than 50 percent of all the income generated by small businesses. The Small Business Administration states that small firms accounted for 65 percent, or 9.8 million, of the 15 million net new jobs created between 1993 and 2009—that’s seven out of 10 new jobs created. Yet, this tax increase is focused on precisely the same group of individuals most likely and capable of hiring new workers.
With 41 months of unemployment rates at or above eight percent, this is not a wise course of action.
I believe there is a better approach. I have been advocating for the extension of all the current rates for one year to provide certainty for individuals and small businesses. During that year, the House Ways and Means Committee, on which I serve, can continue to move forward with comprehensive tax reform, which will simplify our tax code for both employers and individuals, leaving us with lower tax rates and setting the stage for private-sector economic growth to flourish.
Working with my fellow committee members, we’ve laid out a path of action to extend the current tax rates for one year while clearly spelling out our principles for tax reform in 2013. These reforms include a top corporate tax rate of 25 percent, and the elimination of the six rate categories for personal income, replacing them with two: 10 percent and 25 percent for individuals. By doing so, we can throw out 70,000 pages of the tax code, no longer have the highest business tax rate in the world, and lower individual rates, simplifying the tax code and reducing the yearly tax obligations for all. By eliminating loopholes and special deductions, we can ensure every American pays his or her fair share. After 23 hearings regarding this issue, Democrats and Republicans on the Ways and Means Committee agree that these changes will ignite economic growth.
The tax code was last reformed in 1986, under the leadership of President Reagan and the stewardship of Speaker Tip O’Neill, a Democrat. Despite the reality of a divided government, what followed was a sustained period of economic prosperity that benefited all Americans. Nearly 30 years later, we find the same divided government and the same stagnated economy. We should aim that high again and put our economy on the path to prosperity. iBi