Lame Duck Threat: Taxmageddon
Lame Duck Threat: About this series
With the election behind us, Congress will convene a lame-duck session. This series will highlight major issues facing Congress that may be decided by defeated and retiring lawmakers.
Issue Description: “Taxmageddon is a one-year $494 billion tax increase slated to strike the economy on January 1, 2012.” The tax increases will result largely from the “expiration of many long-standing policies that all expire at the end of 2012.” How will this affect us? It will hurt everyone in the immediate sense and in the long term. The average tax increase for middle class families will be over $4,100 per year and job-creating small businesses will be less prone to hire new employees, further weakening our already ailing economy.
Why Lame Duck: Congress has failed to deal with Taxmageddon so far, and while there is certainly disagreement on how exactly to avoid it, lawmakers all agree that they must deal with this problem. Preventing ALL tax increases should be a priority..
Conservative Position: The conservative approach to Taxmageddon is to reverse it and to implement pro-growth tax reform. Prudent reform would consist of “lower rates — including the top rates and those on capital,” which would result in “more growth and revenue.” In addition, it would be “revenue neutral, using traditional revenue scoring and raising the same amount of money the old system would.” These reforms would allow businesses, families, and individuals alike to operate in an environment of certainty. Unlike this conservative approach to taxes, Taxmageddon has the following flaws:
- Taxmageddon is an unprecedented tax hike. It is simply untrue that tax hikes will help improve the economy. Not only this, but, as Heritage’s J.D. Foster and Curtis Dubay remind us, “As tax rates fell during the 1980s and stayed relatively low, high earners earned more income, paid more taxes, and paid a higher share of the tax burden.” So both in terms of economic improvement and revenue raised by the government from high-income earners, tax hikes are a bad idea.
- The Congressional Budget Office has forecast a recession for 2013. J.D. Foster explains that “the disruptive force is Washington policies and, even more Washington behaviors… the policy is Taxmageddon. The behavior is intentional, insistent inaction. The consequence is a recession.”
- The middle class will definitely suffer as a result of taxmageddon, paying an additional $4,130 in taxes, but all income earners will take a hit. Considering Washington’s record of squandering taxpayer money on failed stimulus programs, failed green energy projects, and the ever-growing welfare state, it’s clear that our taxpayer dollars would have been much better spent by us rather than the government.