SPEND AND TAX
By Idaho Senator Mike Crapo
The phrase "tax and spend" is a common one in politics, but given the federal government's out-of-control spending this year, and with all of the spending currently being considered, "spend and tax" might be more accurate. This year, the federal government has spent unprecedented amounts on "bailouts" and "stimulus," which has pushed the yearly deficit to triple that of last year's deficit, which, itself, was already a record. Trillions in further spending and tax increases are on the table in the form of a government takeover of health care and a "cap and trade" energy bill. There is even talk coming from Washington about adding more spending with another "stimulus" bill. A massive amount of spending has already been done, with more being considered, and unless we can put a stop to it, large tax increases will follow.
At the end of the year 2010, the 2001 and 2003 tax relief is set to expire. This means, if Congress does not act, every American will see taxes increase on their income, on their capital gains and dividends, and they will no longer have many of the other targeted tax relief provisions enacted in 2001 and 2003. The expiration of this tax relief will, in effect, be a huge tax increase on the American people, and many of the bills now being considered in Congress will raise taxes even further. Much of this spending and many of these proposed programs are being sold as a way to improve the economy, but history shows that the economy grows and more jobs are created when the government spends and taxes at reasonable and responsible levels. We are also told that the tax increases to pay for new spending will only be seen by those at the upper income levels. Currently, the top one percent of income earners already pays more than the bottom 95 percent combined.
There is a common assumption that raising taxes will automatically bring more revenue to the government. This assumes that individuals, entrepreneurs and small and large businesses do not respond or change their behavior when the tax code changes. This assumption is not necessarily true. Individuals and businesses do respond and make different decision about hiring and expansion depending on the level of taxation. There is nearly 90 years of history showing that tax policy is not quite as clear cut as it seems. According to research by the Heritage Foundation, after tax cuts in the 1920s, 1960s, 1980s, and in 2001 and 2003, economic growth was stimulated, new jobs were created, and because of new economic activity and growth, overall tax revenues increased and those in the upper income levels actually ended up paying a higher percentage of taxes than before.
Back in April, I commended Tax Day Tea Party goers and urged them to "continue to let your elected officials know how you feel about how your hard-earned taxpayer dollars are being spent, not just today, but until your voices are heard and change truly happens." You have continued, throughout the summer and this fall, and your voices are being heard. Now is not the time to let up. The proposed increases in spending and taxation will harm the economy and the country. Tax relief will encourage investment and expansion in the economy, which will create more jobs and more income. Reduced spending and continued tax relief will boost the economy and help the country rise from the current recession. Please go to http://crapo.senate.gov for more about my positions on taxation and spending.
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