“YES” on the Tax Hike Prevention Act of 2012
Today, the Senate will vote on the Tax Hike Prevention Act of 2012 (S.3413), which would prevent the fiscal cliff known as “taxmageddon” from occurring on January 1, 2013. Taxmageddon refers to the coming storm of nearly $300 billion worth of tax hikes that will cripple the U.S. taxpayers.
Specifically, the Tax Hike Prevention Act would extend for one year the 2001 and 2003 tax cuts, the current death tax rate, and the current top tax rate for dividends. It also extends Section 179 small business expensing for 2012 and 2013, and provides an alternative minimum tax (AMT) patch for two years.
Further, this bill would require the Senate Finance Committee to introduce comprehensive tax reform within 12 months of enactment. This reform would have to be revenue neutral, reduce the top individual tax rate below 35% and reduce the corporate tax rate to 25% or less. It would also need to permanently repeal the AMT and enact a territorial tax system.
Without this legislation, the death tax will increase from 35% to 55% with just a $1 million exemption, the dividend tax rate will increase from 15% to 39.6%, the AMT will result in 27 million more Americans paying higher taxes, and millions more will be affected by the expiration of the child tax credit and marriage penalty. The Tax Hike Prevention Act of 2012 would halt a $300 billion tax increase next year, and the subsequent economic harm.
Although a permanent extension would do more for the economy in terms of providing certainty than repeated short-term extensions, this legislation would help avoid a lame-duck session during which outgoing lawmakers may be more inclined to agree to tax hikes.
Heritage Action supports S.3413 and will include it as a key vote on our scorecard.