JOHN CARTER

The American economy, as resilient as it is, is charting rough waters, while soaring cost of living have forced working families to tighten their belts in order to make ends meet.

So why isn’t the federal government doing the same thing?

Many of you have heard or read about the budget which recently passed Congress. What you may not realize is the impact this budget will have on you as an individual and on families across Central Texas.

Between now and 2011 there are a number of tax cuts that are set to expire unless Congress extends them, including the Death Tax, the Child Credit Tax and the Marriage Penalty Tax.

Unfortunately Texans know far too much about the effects of the Death Tax. Under a 2001 tax relief law, the federal Death Tax is gradually being phased-out until it is eliminated completely in 2010. Because of Senate procedural roadblocks, however, the Death Tax will only be gone for one year, coming back to life in 2011. That means when small business owners, farmers and other American working families wake up on New Year’s Day 2011, they’ll be subject to one of the more burdensome taxes on the books today. It also means that it is nearly impossible for families to make long-term financial decisions related to the Death Tax because they do not know when they are going to die.

Across the street from my church is a 400 acre farm. Right now, the second generation of that family is farming the land, and someday they hope to pass it down to their children, the third generation. Due to the growth in the area, the value of the land has increased dramatically since the family first started farming the land. This is not an extremely wealthy family, but the value of their land has increased so they will be required to pay the Death Tax once it is passed down, which, from 2010 to 2011, will jump from 0 to 55 percent. The Democrats FY 09 Budget will resurrect the Death Tax in 2011 for families such as this one.

It wasn’t too long ago when almost half of married couples found that on April 15th, because they were married, they were required to pay more in taxes. This so called Marriage Penalty Tax showed up in 1969 to equalize what used to be an unfair tax advantage for married couples. In 2003, Congress passed the Jobs and Growth Relief Reconciliation Act in order to reduce the crippling impact of the tax on married couples. The problem is this reduction wasn’t permanent, and the Democrats new budget has no plans to keep this critical tax provision in place. Since this tax cut won’t be extended, roughly 23 million taxpayers will see their taxes increase, on average, $466 in 2011, simply because they are married.

Over the past few years families have received welcomed tax relief thanks to the Child Tax Credit, which allows many families to reduce the amount of federal taxes owed by $1,000 for each qualifying child under the age of 17. The Child Tax Credit is an actual reduction of your taxes, not just a deduction from your taxable income. In 2005, the Child Tax Credit was set to be reduced to $700, but recognizing the need to maintain the current amount, Congress passed the Working Families Tax Relief Act of 2004 in order to keep the credit at $1,000 per child through 2010. Unfortunately, the new Democratic budget will slash this credit by 50 percent in 2011 raising taxes on families who benefit from the tax credit by $500 per child. Across the country, approximately 31 million taxpayers with children will see their taxes increase, on average, $859 in 2011.

While these three tax provision will affect many Central Texans, they are not the only tax increases that Democrats have in store for Texans. On top of reinstating the Death Tax and Marriage Penalty, and rolling back the Child Credit Tax, the FY 2009 budget will raise the 10-percent tax rate bracket to 15 percent, affecting more than 6 million individuals and families who previously owed no taxes.

All in all some 116 million taxpayers nationwide will see their taxes increase, on average, $1,833 in 2011 alone. In Texas and District 31, taxpayers will see an increase of $2,100 to their tax bill. Elderly couples with $40,000 in income will see their tax bill rise by 156 percent in 2011, from $583 to $1,489 and a family of four earning $60,000 will face a 70 percent tax hike, with their income tax bill rising from $2,733 to $4,634, an increase of $1,900.

Last year’s budget was bad, but this year’s budget breaks all the records by imposing the largest tax increase in American history, roughly $683 billion, mainly to finance the Majority’s hundreds of billions in new spending. The Democrats’ economic policies today bear a striking resemblance to the failed tax-and-spend policies of the 1970s.

Back then, it took a Republican president and the conservative revolution he founded to do away with those high-dollar, high-tax liberal policies. In a 1986 radio address, Ronald Reagan said, “You know, our Founding Fathers considered the power of the purse the most important responsibility of the legislative branch. If that power is abused, it can have very serious consequences for our nation, not only threatening our prosperity with huge budget deficits but, ultimately, undermining the economic foundations of our safety and national security.”

President Reagan was absolutely right-a budget is much more than a set of numbers on a slate, it is a reflection of our national priorities. It is a test of whether we have a strategic vision for America’s future. On that score, Washington Democrats have failed the American people.

It is fiscal priority debates like these that so define the difference between House Democrats and Republicans. I will to work on behalf of Texas families to implement forward-looking fiscal policies that hold the line on spending and keep taxes low for hardworking Americans.

This entry was posted on Thursday, March 27th, 2008 at 12:59 pm and is filed under Budget, Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.