In 2001 and 2003, Congress enacted broad-based tax reform measures that helped to stimulate the economy. These reforms included marginal tax rate reductions for all income levels, including the creation of a new 10% tax bracket and the lowering of the highest tax rate from 39.6% to 35%. The reforms also included the elimination of the marriage penalty, a doubling of the child tax credit, and a reduction in tax rates on investments that grow the economy and create high paying jobs.
Due to Congressional budget rules, these tax reforms will expire on January 1, 2011. Unless Congress acts soon, Americans will be hit with a $3.8 trillion tax increase. This increase will affect all taxpayers. According to calculations done by the minority staff on the House Ways and Means Committee, a family of four earning $50,000 per year could pay more than $2,100 in higher taxes. And, a single mom with a $36,000 income would see a tax increase of $1,100.
The fact is that tax increases in the midst of a recession are counterproductive. Tax increases mean less money in the wallets of every hard-working American – not just the rich. Tax increases mean you will have less money to buy what you need, increase your savings, and invest in the economy.
Bipartisan support for extending the 2001 and 2003 tax cuts is growing. More and more Members of Congress from the majority party are speaking out about the need to extend these tax cuts. But, time is running out, and what we need is action not just words.
