On the House Floor
This week, the House passed H.R. 3963, a new version of the State Children’s Health Insurance Program bill, which continues to represent a vast expansion of the program, and has once again drawn a veto threat from the President. The House also passed H.R. 1011 and H.R. 1483, two bills which designate certain protections for federal lands along the East Coast. Finally, the House passed H.R. 505, the Native Hawaiian Government Reorganization Act, which seeks to grant tribal status to Native Hawaiians.
The Mother of All Tax Hikes
This week, House Ways & Means Committee Chairman Charles Rangel (D-NY) introduced his long-awaited tax reform legislation. The basics of the package are simple: This is the largest individual income tax increase in history. The bill will add a four percent surtax on Americans earning more than $150,000 a year ($200,000 for couples). That is on top of the scheduled expiration of the 2001 and 2003 tax cuts. So, under Democrats’ plan, over the next few years the individual income top tax rate in the United States will rise from 35 to 44 percent. This crushingly high tax rate will affect approximately 10 million taxpayers directly - including those who report business income, like small business owners and farmers - but the damage will ripple throughout our economy. Because small businesses and family farms often pay their income taxes as individuals, this is a massive tax hike on the engine that drives job growth in this country.
To make matters worse, the surtax is on adjusted gross income, not taxable income. This sounds like a technical issue, but it means that Rangel’s bill will erode the value of a series of tax deductions – including deductions for mortgage interest, charitable giving, medical expenses, state and local taxes, and the standard deduction. And, because the surtax kicks in at $150,000 for individuals and $200,000 for couples, the bill creates a monster of a marriage penalty. In contrast, I have co-sponsored H.R. 3818, which would permanently repeal the Alternative Minimum Tax and create an alternative simplified income tax system with a ten percent rate on taxable income up to $100,000 for joint filers and $50,000 for single filers, and a 25 percent rate on taxable income above this amount. This system would not only reduce the tax burden on working Americans, but it would negate the complexity of our current system, which wastes thousands of hours that Americans could use for more productive activities.
Real Money
Democrats in the House and Senate have set up a fiscal showdown with fiscal conservatives in Congress and the President over the Fiscal Year 2008 spending bills. While the fiscal year began on October 1, the current Congress has yet to send even one of the twelve annual appropriations bills to the President for his signature, knowing that the President will refuse to sign any bill which exceeds the spending limits set forth in his budget. What Democrats call a “mere two percent” increase – the difference between their preferred spending levels and the President’s budget proposal – actually translates to a $204 billion liability over the next five years for American taxpayers. As the late Senator Everett Dirksen is often credited with saying “A billion here, a billion there, pretty soon, you’re talking real money.” In contrast, the previous Congress – controlled by Republicans – eliminated 150 wasteful and/or duplicative government programs through the appropriations process, saving taxpayers over $5 billion.
Quote of the Week
“I want to apologize to my colleagues – many of whom I have offended – to the President and his family and the troops.” - Rep. Pete Stark (D-CA) apologizing for his previous comments on the House floor where he said our troops were getting their “heads blown off for the president’s amusement.” 10/23/07
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