Election Day has come and gone and America has moved a step closer to “Taxmageddon” – the end-of-the-year tax hike that will spell economic hardship for hardworking families and small businesses. It is up to a lame duck session of Congress to take steps to ensure America does not drive over the fiscal cliff that will lead to this severe hardship. Simply put, unless the course we’re on is changed we will have to deal with new, higher tax rates come January. This tax increase is expected to be so devastating that economists at Ernst & Young estimate it would impact nearly one million small businesses and cost our nation 710,000 jobs during the worst unemployment crisis since the Great Depression.
Analysis from the Tax Policy Center (TPC) suggests that if the lame duck session fails to pass new tax legislation or to extend the Bush-era tax rates, the average American household would experience a $3,500 tax increase next year. Anyone who thinks only higher income citizens would have to pay higher taxes is sadly mistaken. While it’s true the top one percent of income earners – those making more than $506,211 a year – would see the largest increase, no taxpayers are spared this hit as nearly seven out of eight households would pay higher taxes.
The TPC study concludes that while the top wage earners will pay more than $120,000 a year in higher taxes, even the bottom fifth of earners – those making below $20,113 a year – would experience an average tax hike of more than $400. That’s because citizens in the lowest tax bracket will increase from paying 10 percent to 15 percent in taxes. Young families will be hit when the child tax credit is reduced to only $500 per child instead of the current $1,000 per child. The marriage penalty will be reinstated so that single filers will pay less per person than if they are married. Not only is this unfair, but it sends the wrong message to couples, discouraging marriage.
Senior citizens who have worked hard for years and invested their dollars will be hit, as well, when they see their dividend investment income taxed at 39.6 percent, up from the current 15 percent. This is in addition to the 20 new taxes being imposed through ObamaCare.
It’s not just young families and senior citizens who will be impacted at the end of the year if “Taxmageddon” is not averted. Families making their living on the farm or through small family businesses will also be hit hard. The estate tax is set to return with a vengeance. Currently, family farms and other estates worth less than $5.12 million are not subject to the so-called “death tax.” Beginning in January, estates worth more than $1 million will be taxed at 55 percent, making it difficult for small businesses, including family farms, to be passed from one generation to the next. To put it succinctly: Families will have to sell the family farm or family business when a loved one passes away in order to pay Uncle Sam 55 percent of the value of that farm or business above a $1 million threshold. This is outrageous and must be stopped! It is beyond logic for government to be so intent on reaching for every tax dollar imaginable that it threatens family farms and other small businesses.
As a farm girl from Archie who now serves on the House Agriculture Committee, I am committed to preserving the family farm by fighting this irresponsible tax increase that will only serve to destroy family farms. Taxes on these properties have already been paid multiple times through income taxes, property taxes and other taxes. It is wrong to subject American families to double, triple or quadruple taxation.
The House has already passed legislation to address the looming tax hike and prevent “Taxmageddon.” But the Senate and the Obama Administration have refused to act on our common sense bills. Now that the heat of the election campaign is behind us, I join my colleagues in urging the President and the Senate to put partisan politics aside and work on behalf of the American people to save this country from economic disaster. We need solutions to ease the burdens confronting small businesses to allow them to prosper and hire out-of-work Americans. I am ready and willing to work with anyone who shares this commitment to removing the barriers to help move our country out of its economic wasteland.
Have a good week.