Hatch: Senate Democrats Are Fiddling While Rome Burns
In Speech on the Senate floor, Utah Senator Warns of Taxmageddon, Calls on Congress to Prevent Largest Tax Hike in American History
WASHINGTON – In a speech on the Senate floor today, U.S. Senator Orrin Hatch (R-Utah), Ranking Member of the Senate Finance Committee, outlined the impact on middle-class families and the nation’s economy if Congress fails to act to prevent the largest tax increase in history that will take place on January 1, 2013.
“Senate Democrats are fiddling while Rome burns. They have failed to address the deficit. Spending surged 24 percent under President Obama when he took office. All of the tax hikes he and his allies have proposed do little, if anything, to pay down his deficits and debt,” said Hatch. “It is time for the Senate leadership to get serious and to focus on making the lives of middle class families easier, not more difficult. The policies from the other side do nothing of the sort. If anything they make them more difficult.”
Hatch continued, “Taxmageddon is coming. The only good news is that Congress can prevent it and extend tax relief for the middle class. That is where my focus will be for the next 8 months, and I hope that my colleagues will join me in securing the benefits of tax relief for all Americans.”
Below is the text of Hatch’s full speech delivered on the Senate floor this evening:
Mr. President, I rise today to discuss the impending tax hike which, if allowed to occur, will raise taxes on practically all Americans come Jan 1, 2013. That is only eight months from now. Earlier in February, The Washington Post called the approximately $500 billion tax hike Taxmageddon, and Federal Reserve Chairman Ben Bernanke described it as a massive fiscal cliff when testifying before Congress.
This tax hike will affect virtually every single federal income tax payer. We must not allow this to happen. America is slowly recovering from one of the greatest recessions in modern history. We remain in a precarious economic situation, with a fragile recovery. It is beyond irresponsible for President Obama to sit idly by and allow this scheduled $500 billion tax hike to occur.
Congress needs to act now in order to prevent this tax hike on America. First we need to focus on tax extenders.
Tax Extenders are temporary tax provisions affecting everything from individuals and businesses to charitable giving, energy, and even disaster relief. My colleague from Montana, Senator Baucus, and I held a hearing in late January to discuss these tax provisions and the fact that Congress year after year continues to extend these provisions without a thorough review of each provision.
Some of these provisions are worthy of being extended, such as the Research and Development tax credit. I have introduced legislation with the Chairman, my friend from Montana, to make this provision permanent. But when it comes to tax extenders, we need to have a real debate, one where the Senate decides which provisions must be extended and which should be allowed to expire.
Second, we need to address the Alternative Minimum Tax, or AMT.
The AMT was initially drafted to provide some type of guarantee that higher-income taxpayers, who owed little or no taxes under the regular income tax due to tax preferences, would still pay some taxes. Yet over time, this tax has grown into a monster potentially ensnaring more and more middle income families every year.
To avoid the consequences of the AMT on the middle class, year after year Congress has patched the AMT. We have indexed the AMT for inflation so that middle income families do not get caught up paying this tax. Not only must we patch the AMT for 2012, we must eliminate the AMT in the long term.
Third, we must focus on death tax reform.
Taxing people’s assets upon their death is just plain wrong. The death tax affects thousands of small businesses owners every year. This year alone, it is estimated that 3,600 estates will be affected. In 10 years, approximately 83,200 estates will be hit with this tax according to the Joint Committee on Taxation.
The President likes to talk about how his policies will help small businesses. Well, if current law expires, the number of small business owners who will face the death tax will rise by 900 percent. The number of farmers who will face the death tax will rise by 2,200 percent. That’s right — two thousand two hundred percent.
Many individuals work their entire lives to build a business, and they reasonably want to pass that business along to their families. Instead of being rewarded for their work, and the work of their families, this is what they face come January 1, 2013. Uncle Sam will take over 50 percent of their assets — 55 percent to be exact.
The survivors of the deceased will be forced to sell land or assets of the business to meet this liability. Let me be clear. Nobody should be forced to sell a single asset in order to meet this arbitrary tax due date. Company assets should not have to be sold to pay taxes. The market should determine when things are bought and sold. That is the best measurement — when a willing Buyer meets a willing Seller and they agree on a price and a time when a company should be sold.
Currently, the law states that there is an exemption equivalent of $5 million and a tax rate of 35 percent on the remaining estate. In 2013 the exemption equivalent will drop to $1 million and the top tax rate will be the full 55 percent.
That’s a 57 percent increase!
The truth is that we ought to repeal the death tax in its entirety. The whole thing must go. And I am working hard to make that a reality. Unfortunately, with the current composition of the Senate, that is going to be an uphill climb. Yet at a minimum, we must extend the current provisions and keep a tax hike from occurring on these job creators.
Fourth and most importantly, we must extend the tax relief signed into law by President Bush and extended by President Obama.
This may be the most crucial piece of legislation Congress passes this year, if not during the entire 112th Congress. If we allow these cuts to expire as scheduled at the end of the year, almost every federal income tax payer in America will see an increase in their rates. Some will see a rate increase of 9 percent, while others will see a rate increase of 87 percent.
Let’s take the average American family of four earing $50,000. This family will owe an additional tax of $2,183.
Democrats insist that that is fair. That is just more people paying more of their fair share. But to whom? And for what?
What this means in reality is that instead of taxpayers using their $2,183 to pay for their children’s education, save for retirement, buy a new home, or invest in a new business, they will be forking that $2,183 over to the federal government. And after winding its way through the federal bureaucracy, some pittance of that $2,183 will be spent on a federal program that too often has zero demonstrated success.
Let’s not sugarcoat this.
In the supposed interest of fairness, families will have an additional $2,183 taken from their wallets in order to serve bigger government.
That is the impact on families and businesses of President Obama’s redistributionist agenda.
Looking at this problem more broadly, economists estimate that if these current policies are allowed to expire, the economy could contract by approximately 3 percentage points. That would be a large hit to an economy that is still weak and recovering from the fiscal crisis of 2008. Adding another fiscal crisis by not extending these tax policies definitely won’t help and will likely do further damage.
So, Mr. President, preventing this tax hike is what we must focus on. Congress should have a laser focus on preventing this looming disaster.
Yet at a time when we should be working to prevent a massive tax increase, President Obama and his Democrat allies are spinning their wheels trying to raise taxes on politically unpopular groups.
These tax hikes are already scheduled to go into effect. Congress doesn’t have to do anything and everyone will pay more in taxes come 2013.
That’s not a good sign given that some people have called this a do-nothing Senate.
I am sure that some people are tired of the mantra among conservatives that Democrats want to raise your taxes and Republican’s don’t. But we say it because it is true.
At liberal think tanks, their employees go to work every morning and think about how they can raise taxes.
My friends on the other side of the aisle, knowing that their constituents already feel overtaxed, spend countless hours devising ways to raise taxes in a way that only hits politically unpopular groups.
And the President is devoting his entire reelection campaign toward tax hiking in the interest of fairness.
Here in the Senate, we have already voted twice on my colleague from New Jersey’s proposal to raise taxes on oil and gas companies.
First we had hearings in the Senate Finance Committee last year. As I said then, that was nothing more than a dog and pony show. Then leadership brought the bill directly to the floor skipping the process of a markup.
Last week we voted for the silly Buffett Tax. This is not serious tax policy. The Buffet Tax is a statutory talking point. And not a very good one at that.
First, the President said it was about deficit reduction.
When we pointed out to him that it raised only $47 billion in revenue over 10-years, a drop in the bucket given the President’s trillions in deficit spending, the White House shifted gears.
Now it was about fairness.
But when we pointed out that his redistributionist scheme, if redirected to a lower tax bracket, would only yield an $11 per family tax rebate, he criticized Republicans for demonizing him as a class warrior.
The President needs to come clean about what the Buffett tax really is.
It is nothing less than a second and even more damaging AMT, one that would force many small business owners and job creators to pay a minimum of 30 percent of their income in tax.
As the Wall Street Journal said on April 10, “The U.S. already has a Buffett rule. The Alternative Minimum Tax that first became law in 1969…The surest prediction in politics is that any tax that starts by hitting the rich ends up hitting the middle class because that is where the real money is.”
And what is really rich about the Buffett rule, is that Mr. Buffett would be able to avoid his own Buffett tax.
So what is the President doing? Why, with Taxmageddon around the corner, are President Obama and his liberal allies dithering with these harmful tax increases?
The answer is politics.
President Obama has read the polls. He knows he’s in trouble. His approval rating is declining and he does not have a single positive accomplishment to run on for a second term.
The $800 billion dollar stimulus? A failed policy that hasn’t kept the employment rate under 8 percent.
Obamacare? Rejected soundly by the American people as evidenced by the 2010 midterm elections, it might now be rejected by the Supreme Court as one of the biggest unconstitutional boondoggle in our nation’s history.
What else does he have?
His fawning admirers might not know it yet, but Mitt Romney is in the catbird seat.
President Obama long ago lost independents. So he is appealing to all he has left, core left wing supporters, one step from an Occupy Wall Street encampment, who love class warfare.
Before the Buffett rule, Democrats proposed six different pieces of legislation that in one form or another raise taxes on millionaires.
Here they are.
And every one of these bills was focused on raising taxes to pay for more government spending.
Let’s not pretend that all of these redistributionist tax plans comprise serious policy.
And let’s not forget that every minute Democrats spend goofing around with these plans, is a minute that we do not spend preventing the largest tax increase in American history.
Mr. President, Senate Democrats are fiddling while Rome burns. They have failed to address the deficit. Spending surged 24 percent under President Obama when he took office. All of the tax hikes he and his allies have proposed do little, if anything, to pay down his deficits and debt.
It is time for the Senate leadership to get serious and to focus on making the lives of middle class families easier, not more difficult. The policies from the other side do nothing of the sort. If anything they make them more difficult.
Taxmageddon is coming. The only good news is that Congress can prevent it and extend tax relief for the middle class.
That is where my focus will be for the next 8 months, and I hope that my colleagues will join me in securing the benefits of tax relief for all Americans.