Brian Riedl writes in Human Eventsabout the Democrats' recently passed budget that would raise taxes on millions of Americans.
The House- and Senate-passed budgets would raise taxes on every American taxpayer by an average of $3,000 per household. But don’t expect Congress to share in the sacrifice: The budget would hike discretionary spending by 8 percent, and not cut a single government program.
First, the tax increase. The largest four-year revenue surge in 40 years has pushed tax revenues to 18.8 percent of GDP -- well above the historical average. Yet the House-passed budget tied itself to a revenue baseline that assumes the 2001 and 2003 tax cuts will expire, and that the Alternative Minimum Tax (AMT) will catch another 20 million Americans. That baseline also assumes the child tax credit would be halved, the marriage penalty reimposed, and the 10 percent tax bracket raised to 15 percent. Investment taxes would likely rise, and the 55 percent “death tax” would be reinstated as well. (The Senate budget would prevent some of the lower-income tax hikes.)
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While there is never a good time to raise taxes, pledging $4 trillion in tax increases during a time of economic uncertainty is especially worrisome. Raising tax rates on every taxpayer and business would reduce incentives to work, save and invest, and therefore significantly reduce the economy’s long-term capacity to grow and raise living standards.
You can read Senator Mitch McConnell's comments on the budget here.
The Democrats in Washington released their budget this week, and for the first time we get a look at their definition of "rich".
Leaders of the Congressional majority and the two Democrats running for President admit they want to raise taxes, but claim they are only targeting the wealthy among us. It seems there is a striking disconnect between their speeches and their newly announced plan.
Under the Democrat budget, the rich include single workers who earn $34,000 a year. Their plan labels couples with children making $63,000 "rich", and paves the way for a tax increase on single mothers who earn $45,000.
If the Democrats' plan were to pass, 7.8 million low-wage earners who now pay no taxes at all would be added to the tax rolls.
In total 43 million families would be hit with a massive tax increase averaging $2,300.
Sen. Mitch McConnell was on The Pulse with Leland Conway this morning. They discussed Sen. McConnell's fight to cut taxes, including a permanent fix for the Alternative Minimum Tax (AMT).
Congress created the AMT nearly 40 years ago to target a small group of less than 200 wealthy Americans who managed to pay no income tax. But Congress failed to index the tax to inflation. As a result, a tax that was meant to affect only two out of every million taxpayers could ensnare 25 million in 2008.
Last year Congress passed a last-minute patch ensuring that millions of middle-class families would not be forced to pay the AMT for 2007. But if Congress fails to take additional action, 174,000 middle-class Kentuckians will be subject to massive tax increases for 2008.
Senator McConnell is working for a permanent fix to the AMT problem and is leading the fight to stop some in Congress who want to use an AMT fix as an excuse to raise new taxes.
You can listen to the conversation about tax cuts below or on the website of WLAP radio here.
The following column from Sen. Mitch McConnell was printed in several Kentucky newspapers. You can also find the column here.
The American economy has enjoyed six straight years of uninterrupted growth. But recently, that growth appears to be slowing. In my travels across Kentucky, I've met many families who are uncertain about their economic future, and I felt Congress had to act.
I'm glad to report that we did - by passing a bipartisan economic-growth package that will act as a "booster shot" for our economy by providing fast tax relief to American taxpayers.
As U.S. Senate Republican Leader, I have long urged both Republicans and Democrats to work together to tackle the problems our country faces.
This economic-growth package presented a perfect opportunity to demonstrate how we can do so.
It was important for Congress to act quickly, and both parties put partisanship aside to get this legislation to the president's desk.
Passing this economic-growth package was not a victory for Republicans or Democrats. It was a victory for the American people.
The law will put more money back into the pockets of taxpayers through tax rebates of up to $600 for eligible individuals and $1,200 for eligible couples. Families with children will receive additional rebates of $300 for each child. In addition, the law includes tax incentives encouraging businesses to invest and create new jobs.
As the Senate considered this economic-growth legislation, I felt it was important to not leave low-income seniors, disabled veterans or the widows of disabled veterans out. So I led the effort to pass an amendment to the bill that designated Social Security payments and VA disability payments as qualifying income. That ensures seniors, disabled veterans and the widows of disabled veterans will receive rebate checks.
My amendment also took steps to make illegal immigrants ineligible to receive rebate checks, because our government should not reward those who broke the law to get into our country.
Thanks to this economic-growth package, 1.8 million Kentucky families will receive rebate checks later this year. The rebate checks sent to Kentucky will total $1.6 billion in the hands of the Commonwealth's taxpayers, who will spend it and reinvest it back into our economy.
After the Senate passed the economic-growth package, with my amendment, the president signed it into law on Feb. 13. It will have a significant impact, by injecting $152 billion back into our economy.
And we proved that both parties can work together quickly and decisively on behalf of the American people. I'm hopeful that Republicans and Democrats can continue to work together in the months ahead to keep our country moving forward.
The Associated Press reports that leaders of the Senate Majority have agreed to join Sen. Mitch McConnell, Speaker Pelosi, President Bush, and House Republicans in supporting a bi-partisan economic stimulus package. The Senate Majority previously refused to support the bi-partisan package. (Emphasis added)
Senate Democrats, under pressure from party colleagues in the House, agreed Thursday to an economic rescue package that would add checks for Social Security retirees and disabled veterans but leave out extended jobless benefits and additional business subsidies.
The package would rush tax rebates of $500 for individuals and $1,000 for couples to most taxpayers and grant business tax cuts to revive the economy.
Leaders in both parties and in both chambers of Congress had agreed by Wednesday night on the idea that 20 million seniors whose sole or main income is Social Security and 250,000 veterans living off disability benefits should be added to those getting rebates under the $161 billion stimulus bill first negotiated by House Democrats and President Bush.
... The retreat by Senate Democrats came after House Speaker Nancy Pelosi sided with Republicans, including GOP Senate Leader Mitch McConnell of Kentucky, and called on the Senate to stop its infighting and pass the bill.
In doing so, Pelosi, D-Calif., split openly with Senate Majority Leader Harry Reid, D-Nev., who backed the more expensive package.
"There's no reason for any more delay on this," Pelosi said Thursday before agreement was reached.
... Later, Pelosi issued a statement tailored to support McConnell's position — which Reid has repeatedly rejected — and pointedly ignoring the other add-ons.
... "We didn't block the proposal," McConnell said. "We just said there's a better way to go and there's an alternative."
This column by Sen. Mitch McConnell appeared in today's Courier-Journal.
I've always known David Hawpe and The Courier-Journal's editorial board considered themselves smarter than the average bear, but I never knew you considered yourselves clairvoyant. How else to explain your power to know the outcome of a vote that hasn't even happened yet on a bill that hasn't even reached the Senate floor?
In Saturday's editorial ("Back of his hand"), you claimed I "blocked" the "Senate Democrats' stimulus package, preferring instead a cheaper, less humane House-passed plan." But there's a real problem with that charge: The Senate won't vote on the partisan bill you prefer until at least Wednesday.
And the bipartisan bill you deride as "less humane" and cheap was co-authored by the liberal Speaker of the House, Nancy Pelosi, D-Calif., and the Republican House leader. And at roughly $150 billion, I don't think that meets anyone's definition of "cheap."
The true point of your editorial was clear by the third paragraph, when you argued for a partisan bill written by "the Senate Democrats" instead of the bipartisan bill. An editorial board that so often demands bipartisanship recoiled at a bipartisan bill that passed the House by a vote of 385-35.
If we are to have an impact on the economy before it slows any further, the time to do it is now. There is simply no time for the type of partisan wrangling your editorial called for.
Every Democratic congressman in the Kentucky and Indiana delegations voted for the bill you call "less humane." I guess you'll attack them next.
The Hill newspaper reports on a working group appointed this week by Senator Mitch McConnell:
Senate Minority Leader Mitch McConnell (R-Ky.) said the fiscal reform working group would recommend ways for the Senate to bring about greater transparency and fiscal responsibility to government spending. The group will report findings to the Republican Conference by March 15.
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A GOP leadership aide, who said the task force would have a wide jurisdiction, noted it includes members from the Appropriations and Finance committees, as well as a top reformer in Coburn. The broad membership is intended to ensure the best recommendations on earmarks are provided.
“Although we’ve taken steps in the past to reform the spending process, more can and should be done to restore the public’s trust and bring greater transparency to the way the federal government spends taxpayers’ money,” McConnell said in a release.
You can read the entire article from The Hillhere.
11 days ago under the leadership of Senator McConnell, the Senate moved to fix the AMT while preventing a proposed Democrat tax hike.
Today House leadership made it clear they are in no hurry to fix the AMT. If they continue to do nothing, 23 million Americans including 174,000 Kentuckians will be hit with a massive tax hike.
House Majority Leader Steny Hoyer (D-Md.) hinted Tuesday that Congress may not be able to stop a big tax increase from hitting 23 million Americans.
Hoyer, pressed on whether Congress would resolve disputes over the Alternative Minimum Tax (AMT), said, “Maybe.”
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An AMT patch must be passed soon to avoid a big tax hike. By waiting as long as they have, lawmakers have already raised the risk of a tax-filing mess that could provide fodder for political attacks. The IRS says it needs seven weeks from the time the president signs the AMT patch into law to update its forms and re-program its computers.
10 days ago under the leadership of Senator McConnell, the Senate voted to fix the AMT while stopping a Democrat-sponsored tax hike.
In an editorial yesterday, the Bowling Green Daily News praised the Senate AMT fix, and called on the House to pass the bill immediately.
The Senate has passed a bipartisan measure with 88 votes to provide a solution for this problem.
The House, however, doesn’t want to provide tax relief unless they make up the loss of tax revenue with a tax on others.
This is simply not justified - the government is now receiving AMT tax revenue from people who the tax was never intended to cover in the first place.
Unless the House and Senate can come to an agreement soon, tax refunds for millions of people will be delayed because changes in the tax code will have to be reprogrammed in the IRS computer system.
The House should join the Senate in passing a clean bill providing AMT tax relief and leave the question of finding additional tax revenue for another time.
The bottom line is that action is needed immediately on this most important matter.
You can read the entire Bowling Green Daily News editorial here.
Last night the United States Senate passed a bi-partisan bill that will fix the AMT and prevent a middle-class tax hike. The bill passed by the Senate did not include a massive tax increase proposed by the Democrats.
The Democrats' delay in passing this common-sense solution was both unprecedented and indefensible.
The bill passed by the Senate will now move to the House for its consideration.
Lexington ABC affiliate WTVQ-TV reported yesterday that the failure of Congress to fix the alternative minimum tax (AMT) is preventing the government from publishing tax information for 2007. As a result, tax filing season will start later, and it's likely that many (if not all) refunds will be delayed.
In Megan Skaggs' report, UK professor Tom Pope calls the inaction "political" and warns that if Congress doesn't fix the AMT, up to 25 million Americans could be subjected to this tax that was originally intended only for wealthy citizens who would otherwise pay little in taxes.
Most disheartening is that this situation could have been avoided months ago. Senate Republicans have sponsored five suggested fixes for the AMT this session. In three of those cases, just one member from the majority party voted for our proposals; in two, not a single member from across the aisle voted for this important tax relief. I am hoping media attention like this will spur them into long-overdue action.
Today the Louisville Courier-Journalpublished an op-ed piece I wrote regarding the Alternative Minimum Tax. This outdated, poorly written potion of the tax code must be dealt with before it ensnares 25 million people this year.
Below is the entire text of my op-ed. And I also encourage everyone reading to call their elected officials in Washington at (202) 224-3121 to encourage them to fix this problem immediately -- and to do so WITHOUT raising more taxes.
Reversing the sting of the AMT By Mitch McConnell Special to The Courier-Journal
Americans aren't surprised anymore when liberals in Washington call for a tax hike. But they would be surprised to learn that thanks to a mistake in the tax code called the Alternative Minimum Tax (AMT), Congressional liberals can sneakily raise taxes every year -- without even holding a vote.
And if Congress doesn't act soon to stop this, tens of millions of Americans, including about 174,000 families in Kentucky, will be hit with the AMT on April 15. The overwhelming majority that has never faced it before won't believe the unpleasant surprise.
You may have never heard of the AMT and think it doesn't affect you. That's because the AMT is a "stealth tax" that grows to attack more and more unsuspecting taxpayers every year, making it a massive, middle-class tax hike.
Congress created the AMT in 1969 to target a reported 155 wealthy Americans who, through legal deductions, managed to pay no income tax. At the time, the law was designed to affect only two out of every million taxpayers.
But that law failed to take inflation into account when deciding who was "wealthy enough" to have to pay the AMT. As a result, millions of middle-class Americans who the AMT was never intended to reach are now falling into the AMT tax trap.
Millions more will feel the AMT's sting if Congress fails to act soon. In the past, Congress has passed quick-fix laws to exempt many taxpayers who otherwise would be vulnerable to the AMT.
But with no law to do that on the books for 2007, the number of tax filers forced to pay this stealth tax will grow from 3.5 million in 2006 to over 25 million in 2007 -- to the tune of $65 billion shifting from American families to the government's coffers. And about 174,000 of those families will be right here in Kentucky.
Congress tried to right this wrong before. We passed, and I proudly supported, a permanent repeal of the AMT in 1999. Unfortunately, Bill Clinton blocked it with his veto pen. Since then, the number of taxpayers targeted by the AMT has only grown.
Now it's time for Congress to fix its mistakes and show Americans they understand the unfairness of the AMT stealth tax. Millions of people are paying more to the government than intended, all because of a poorly written law.
Some liberals in Washington are willing to repeal the AMT, but only if they get to raise your taxes elsewhere to make up for it. They don't view repealing the AMT as a way to protect taxpayers but as an excuse to raise more taxes. That's wrong.
We should repeal this middle-class tax hike entirely -- without raising taxes elsewhere. This is tax revenue the government never intended to collect; eliminating this stealth tax will protect millions of families from an unwelcome tax hike.
Whatever Congress does, it needs to act now. It's unfair to leave millions of taxpayers uncertain of what they will owe the tax collector on April 15.
And it's wrong to subject the American people to a sneaky, creeping tax hike that grows to encompass more taxpayers each year without a single vote in Congress.
We need tax relief now. The best way to start is with the permanent repeal of the outdated and poorly written law creating the stealth middle-class tax hike of the AMT.
Mitch McConnell, a Louisville Republican, is the U.S. Senate minority leader.
Cal Thomas has posted an op-ed in the Nashua Telegraph about the frightening tax proposal being considered in the House:
Just in time for Halloween comes House Ways and Means Committee Chairman Charles Rangel – henceforth known as Count Rangula – with a bill that would suck more blood from the American taxpayers. Chairman Rangel is an incredibly talented legislator. That said, the tax package the Democrats are proposing would suck the life out of the American economy. And to carry a metaphor even further, the Senate will drive a stake through the heart of any tax hike that comes over from the House.
Read the entire piece here and have a safe and Happy Halloween.
Today's Wall Street Journal carried an excellent op-ed piece about our bipartisan efforts to pass a permanent moratorium on Internet access taxes. Last night we passed a seven-year extension of moratorium which we expect will go to the White House for signature after passage by the House. We are hopeful this can be signed before November 1 when the current moratorium expires.
I've included the text of the piece below. I will continue to fight for a permanent moratorium but the most important thing for now is that we've held off any new taxes for the next seven years.
I thank all those who have written and called for their support.
Web Tax Triumph
Wall Street Journal editorial October 26, 2007
Internet consumers scored a victory in Washington last night, thanks to Senator John Sununu (R., N.H.), with big assists from Minority Leader Mitch McConnell (R., Ky.) and Oregon Democrat Ron Wyden. The Senate passed a seven-year extension of the Internet tax moratorium, with robust language that should stiff-arm even the most voracious state and local governments looking for loopholes to tax your email.
Mr. McConnell created negotiating leverage by forcing on to the Senate schedule a vote on Mr. Sununu's permanent Net tax ban. The last thing moratorium opponents wanted was to face an up-or-down vote on a permanent ban, which is why they recently cancelled a committee vote when it became clear they had underestimated the popularity of the tax moratorium. That's also why you can now ignore the letter on the preceding page, in which Senators Tom Carper (D., Del.) and Lamar Alexander (R., Tenn.) sing the praises of their short, loophole-ridden "moratorium" bill. They junked it last night and scrambled aboard the Sununu steamroller.
While accepting less than a permanent ban, Mr. Sununu and his pro- Internet allies won additional provisions authored by Mr. Wyden to protect consumers. A report yesterday from the Congressional Research Service revealed that the House had botched the drafting of its four-year extension by leaving open the possibility of new taxes on email services if they weren't marketed along with Internet access service. Kudos to Senators Sununu, McConnell and Wyden. If the House, as expected, passes the Senate bill early next week, President Bush can sign it into law before the current ban expires November 1.
Yesterday, on the Senate floor, I asked for unanimous consent on a bill to permanently ban Internet taxes. The Majority is resisting a permanent ban on these taxes and is instead pushing for a "band-aid" solution to simply extend the moratorium for four years. That's just not long enough.
We need a permanent ban on Internet access taxes, and we need to pass it within the next 12 days. If we don't, state and local governments will jump in and lay these onerous taxes on all of us. And our Internet bills will start looking like our phone bills. The Government doesn't need to put meters on our modems.
Sign my online petition to support a permanent ban on Internet access taxes and read the remarks I delivered yesterday on the floor of the Senate below. Also be sure to call your member of Congress and Senators at (202) 224-3121 and demand they support a permanent ban -- not just an extension of the moratorium.
Following are the remarks I delivered yesterday.
Mr. President, in just 13 days the internet tax moratorium will expire.
“If Congress hasn’t acted by then, state and local governments will be free to impose new taxes on Internet access – and trust me, they will.
“We need to be straight with the American people about what’s happening here — that the Senate Majority wants to preserve the possibility of taxing access to the Internet.
“The internet has transformed this country. It’s cleared new pathways to learning for rich and poor. It’s brought a level of efficiency and innovation to the shop floor, the home, and the corner office that were unimaginable just a decade ago. Just think of the millions of middle class Americans who’ve lifted their fortunes through online auction sites or made their first stock purchases over online trading sites.
“The internet’s been at the heart of America’s economic growth over the past decade—all because government hasn’t gotten in the way. But those days are over if we let our Democratic colleagues open the Internet to new taxes.
“We can’t let it happen. For the sake of our economy, for the sake of our competitiveness, and for the sake of consumers who don’t want to see new taxes on their bills – we need to ban taxes on internet access permanently.
“The House of Representatives has sent us a bill that would extend the moratorium for four years. Frankly, I don’t think that is long enough.
“If we all agree that taxing Internet access hurts consumers, hurts innovation, hurts broadband deployment, why stop at four years?
“Why not keep I.T. tax-free forever?
“So Mr. President, I say to my friends on the other side – the clock is ticking.
“If you object to considering the Sununu bill to make the moratorium permanent – let’s take up the House-passed bill with a couple of relevant amendments in order. One would make the moratorium permanent, and failing that, one would extend it for substantially longer than four years.
“We can debate these amendments quickly and vote – to see where the Senate stands on this very important question of keeping the Internet free of onerous taxes.
“We can do it this week, Mr. President, or next week – but the Senate must act before the moratorium expires in 13 days. And it is my intention to have a vote on the question of whether the moratorium should be extended permanently, or merely for another four years.”
