Hatch Statement on Joint Committee on Taxation Analysis of Hatch/McConnell Tax Hike Prevention Bill
TO: Reporters and Editors
FROM: Antonia Ferrier and Julia Lawless for Senate Finance Committee
Ranking Member Orrin Hatch (R-Utah)
RE: JCT: Difference Between President/Reid Small Business Tax Hike AND
Hatch/McConnell Tax Hike Prevention Bill Is $28 Billion
DATE: Thursday, July 19, 2012
Earlier this week, leading Senate Democrats said they would prefer to push America’s economy off the fiscal cliff rather than prevent a small business tax hike at the end of the year – hitting close to a million businesses with flow-through business income. Over half of that business income would be hit by the President’s tax hike, according to Congress’ non-partisan tax scorekeeper, the Joint Committee on Taxation (JCT). Small business owners, leading economists, the Congressional Budget Office (CBO), the Chairman of the Federal Reserve, the International Monetary Fund (IMF), and even a growing number of Democrats have said that America’s economy is too weak to allow that to happen.
What is the price of this dangerous game of Russian roulette that the White House and leading Democrats are playing with America’s economy? According to JCT, the tax hike in the President’s small-business tax hike plan relative to the plan put forward by Senate Finance Committee Ranking Member Orrin Hatch (R-UT) and Senate Republican Leader Mitch McConnell (R-KY) that does NOT include a tax hike on the top two marginal tax rates is $28 billion. On a comparable policy basis, relative to the CBO baseline that assumes all taxes go up, the Reid plan results in $272 billion in less revenue, while the Hatch/McConnell plan results in $300 billion less revenue. To put the difference in context, the $28 billion difference amounts to less than 3 days of federal government spending and is just over 3 percent of the President’s failed economic stimulus. (The JCT analysis of the two proposals are attached and can be found HERE and HERE.)
“The American people deserve better than to have the President and his allies threaten to melt down our economy for what amounts to less than three days of federal spending,” said Hatch. “Economic growth is slower today than it was when the President agreed to stop these massive small business tax hikes. With 41 consecutive months of unemployment over 8 percent, it just makes sense to extend this tax policy for a year so we can enact meaningful, pro-growth tax reform.”
NOTE - The Reid plan only includes a one-year AMT patch through the end of 2012, whereas the Hatch-McConnell plan includes a two year AMT patch through the end of 2013. In order for JCT to do an apples to apples comparison of the two proposals, they scored the two based on a ONE YEAR AMT patch for both, thereby reaching $300 billion for Hatch-McConnell and $272 billion for Reid.
The President and Democratic Congressional Leadership’s rationale for risking a recession is that it is the fiscally responsible thing to do. But the difference between the Senate Democrats’ position on the tax portion of the fiscal cliff is $28 billion, which, in terms of comparable fiscal policy, loses over 90 percent of the revenue of the Hatch-McConnell proposal. At the same time, Senate Democrats rejected the Ryan budget, which achieved over $152 billion more in deficit reduction for fiscal year 2013, i.e. over 5 times more deficit reduction.
The President and congressional Democrats are willing to risk a recession over an amount of extra revenue by disproportionately hitting the most dynamic small business owners and that amounts to less than one-fifth of the deficit reduction than the House budget they rejected. In the name of $28 billion, the White House and its allies are full steam ahead with a plan, that according to an Ernst & Young survey, would shrink the economy by 1.3 percent and shed 710,000 from the American workforce, while repeatedly rejecting any meaningful spending reductions that are the drivers of America’s debt.