Don’t Rubber Stamp the Tax Deal
Yesterday, President Obama announced a deal with Congressional negotiators to prevent some tax increases while increasing spending. While preventing taxes from increasing on all Americans scheduled for January 1, 2011 is vital, there are a number of problematic provisions in the current agreement that should be dropped by Congress as it considers the agreement.
Read more: see our specific objections & what you can do.
- Return of the Death Tax: As The Heritage Foundation has consistently demonstrated, the estate tax will punish job creators, kill some small businesses, and wreak havoc on the economy. There is currently no death tax, but it would spring back to life in 2011 to tax estates over $5 million at a rate of 35%. A two-year extension of current tax rates needs to ensure that the death tax remains dead.
- Temporary Tax Rates and Additional Uncertainty: As the saying goes, the only certainties in life are death and taxes, but families and businesses need long-term certainty on what their taxes will be in order to plan accordingly, invest, and take risks that ultimately create jobs. By allowing for only a two-year extension of current tax rates, the President’s agreement provides no long-term certainty and ensures an ongoing lack of economic recovery.
- “Permanent” Unemployment Benefits: The Heritage Foundation, drawing from the full spectrum of economic research, has shown that extended unemployment benefits decrease individuals’ incentives to get new jobs. The President wants to further extend these “temporary” unemployment benefits, which are in addition to standard unemployment insurance, for another 13 months. If these temporary benefits never expire, they will become yet another permanent entitlement, and if President is committed to them, why can’t they be offset with lesser priority spending.
Congress should evaluate this deal carefully, not act as a rubber stamp.