Tax Increases Looming
April 12, 2012
Tax Increases Looming
By: Congressman Tim Huelskamp
Every April millions of Americans gather at their kitchen tables with receipts and pay stubs and attempt to fulfill their legal obligation to pay their taxes. Navigating the complexity that is the U.S. tax code is both challenging and intimidating. Decades of special exemptions, deductions, and loopholes paid as political favors leave Americans pulling out their hair while they try to fill out their forms. On top of that, years of reckless spending and borrowing leave many Americans scratching their heads as to the effectiveness of Washington’s expensive pursuits.
However, nearly half of all Americans pay absolutely no federal income taxes. In fact, millions of Americans will view April 15 as a great day. According to the Joint Committee on Taxation, in 2009 approximately 30% of those filing tax returns actually received more money from other taxpayers then they paid in income taxes. This is not a refund on what they are paid - this is net income FROM the government.
But come 2014, filing taxes will be even worse for all taxpaying Americans. When the Bush-Obama tax cuts expire at the end of 2012, all taxpayers will be subject to higher tax rates. Those in the lowest tax bracket will see their rates increase by half, from 10% to 15%. Earners whose incomes fall into every other bracket will also see their tax rates go up as well. On top of those increases, the marriage penalty will return, family-friendly deductions like the child tax credit will decline precipitously, and the death tax will climb to 55%. And, we cannot forget about a surge in taxes from ObamaCare scheduled to take effect in 2014.
Many in Washington argue that tax increases are needed to balance the budget. But, based on decades of past experience, tax increases will only result in trillions of dollars more for the government to spend – or waste – not deficit reduction.
I know Washington can do more with less. In my first year in office, we cut more than $130,000 from our own budget – on top of voting to cut our budget by over 10 percent over the past two years. I have introduced legislation to make sure that the Bush-Obama tax rates are made permanent, and have also voted to cut spending back to levels before the stimulus. Simultaneously holding the line against tax increases and reducing spending keeps more money in the hands of families and out of the hands of politicians and bureaucrats.
Here are some key points to consider as this massive tax increase looms around the bend:
- It is economically devastating to increase taxes during a recession. It was not that long ago that President Obama himself said: “You don’t raise taxes in a recession.” Though he seems to have abandoned this belief, I agreed with him then.
- Cutting marginal tax rates can actually increase revenue. President Kennedy championed major tax cuts in the 1960s as did President Reagan in the 1980s, frequently making the case that the federal government can actually take in more money when taxes are low and certain. Kennedy and Reagan were proven right – revenues increased as tax rates were reduced.
- Most Kansans want fundamental tax reform – and I agree. We want a simpler, fairer, flatter tax code where politicians in Washington aren’t using the tax policy to pick winners and losers. And we do not want a system where political access and favors means special tax privileges for just a few.
Like many Kansans, I am not concerned that Washington’s problem is that it has too little to spend. Its problem is that it simply wants to spend too much. At that same table where American families attempt to navigate the U.S. tax code, they make decisions – sometimes tough – about what they can and cannot afford. American families have had to do more with less; it is time that Washington does the same.