Viewpoint

Viewpoint: Tax increases unwise in hard financial times

By Kevin McCarthy

L ast month marked the annual tax deadline for millions of Americans to file their income taxes. President Ronald Reagan once said that one of the ways government approaches the economy is “if it moves, tax it.” Unfortunately, the economy must have done a lot of moving because the federal government has collected record-high tax revenues. Almost every activity we do requires paying some sort of tax to the local, state or federal government.

This is not without consequences. In 2007, the nonpartisan Tax Foundation declared May 5 to be Tax Freedom Day; it took California taxpayers, on average, more than four months and four days to earn enough to pay off their local, state and federal tax burden. More fundamentally, that means less money in our pockets to save and spend on our families.

This cannot happen at a worse time. Many families have been forced to make hard decisions and change how much they spend for everyday needs. The last thing we need at this time of economic uncertainty is more taxes and a heavier tax burden.

Hardworking California families are reassessing their spending habits to make ends meet, and the least that Washington can do is to do the same. We have heard a lot about government bailouts, but the worst thing Washington could do in this current economy is to propose the largest tax increase in American history in order to raise more revenue to “bail out” the unwise and irresponsible Federal spending decisions. We can fund the programs we need to fund without resorting to raising taxes because the federal government does not have a revenue problem; it has a spending problem. Last year, federal revenues were 18.8 percent of Gross Domestic Product, a high from a historic perspective.

We need to look at how large the federal government is growing each year. For instance, some economists believe that Congress can balance the budget in the next couple of years by only increasing Washington spending

by 2 percent annually instead of 4.5 percent per year. Finally, we should strengthen, not weaken, programs to detect fraud, collect unpaid taxes and reduce overpayments in our government programs.

But there are those in Washington who believe we must increase taxes, and they approved a budget blueprint that would do just that. What does that mean for middle-class families? If these tax increases pass, a family of four earning $50,000 annually would pay on average $2,155 more in taxes each year. This includes increasing the tax burden by $500 if you have children because they propose to cut the child tax credit in half from the current level of $1,000. Small businesses, the largest U. S. job creator, would lose important tax relief from last year, which helped some of those small businesses keep their doors open. Finally, the unfair “death tax” would be resurrected from its grave after 2010.

Taxpayers deserve better. That is why I have co-sponsored the Tax Increase Prevention Act that would prevent those tax rates from increasing. Further, I support legislation that would simplify our tax system by repealing the Alternative Minimum Tax and allowing Americans the choice to calculate their taxes based on only two simple tax rates, beefed up by a large standard deduction and personal exemptions. For the majority of Californians, this tax relief and tax simplification would be welcomed and embraced.

In a time of economic uncertainty, Congress can provide American families and businesses the certainty of a pro-growth economic environment that rewards innovation and hard work by passing tax relief and by spending taxpayer money more responsibly. We can do that by working together in a bipartisan manner and making the tough choices necessary to lead our economy today and in the future.