Allowing the 2001 and 2003 tax cuts to expire will be the largest tax increase in American history, hitting the small business owners, middle-class families, investors, and retirees.
The $1,000 per child tax credit will fall to $500, and the marriage penalty will be re-imposed. Most working families that pay taxes will see their income tax rates jump from three to five percentage points. The death tax will return in 2011 at a 55 percent rate. Capital gains and dividends tax rates currently 15 percent for most investors – will jump to 20 percent and 39.6 percent, respectively, and capital gains to nearly 24 percent in 2013.
Taxpayers can find out how much more they would owe in taxes at the Tax Foundation’s new “Bush Tax Cuts” calculator (www.MyTaxBurden.org).
President Obama’s tax hike plan will punish America’s small businesses especially hard. Here are the facts: More business income is taxed at individual rates rather than corporate rates. According to the Treasury Department, two-thirds of all flow-through business income is taxed at the top two rates. More than 2 million of the taxpayers in the top two tax rates are small business owners. Therefore, one-third of all business income will see its tax rates rise under Obama’s tax increase plan.
Nearly seven out of ten new jobs since 1992 were created by small businesses, according to the Bureau of Labor Statistics. Raising these tax rates would punish the very taxpayers most likely to hire unemployed Americans and create new jobs.
All of the 2001/2003 tax relief should be made permanent. Despite intense blame, the tax cuts played a relatively small role in past and future budget deficits as documented in this op-ed by Heritage’s Brian Riedl. Under the Obama-Democratic tax hike plan, $676 billion would be taken out of the economy, which almost as much as the Democrats put into the economy with their $787 billion stimulus package enacted last year.
For the sake of our economic well being, Congress should halt these massive tax increases, even temporarily, so that the economic recovery and job creation can take hold.
Cesar Conda is a Founding Principal and Executive Committee Member of Navigators Global LLC, a bipartisan government relations and strategic communications firm with offices in Washington, D.C., New York, and London.