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Capitol Comment
by Senator Kay Bailey Hutchison
Low Taxes for Texas Families
October 26, 2007
President Ronald Reagan once defined a taxpayer as “someone who works for the government but doesn’t have to take the civil service exam.” Sadly, there’s some truth to his statement. The average American works from the beginning of the year until April 30th just to pay his tax bill. The rest of the year, he works for himself. As prices rise on everything from food products to gasoline to health care, families should be allowed to keep more of their hard-earned income. But Congress may be about to burden American families with thousands of dollars in new taxes.
In 2001 and 2003, I helped pass historic reductions to death taxes, capital gains, small business and income taxes. This sweeping tax relief benefited millions of American families and small businesses. An increase in the child tax credit from $600 to $1,000 per child has helped families whose budgets are often pinched. And I am proud to have championed a significant reduction of the marriage penalty by doubling the standard deduction. Lower tax rates for individuals and small businesses have spurred growth and stimulated our economy to reach new heights. In fact, we have created more than 8.1 million new American jobs since the cuts took effect—more than all other major industrialized countries combined—through 49 consecutive months of job growth and nearly six years of uninterrupted economic expansion.
Rather than make these successful cuts permanent, the new majority in Congress plans to introduce a trillion dollar tax package that could overwhelm middle class families and stifle business growth. If the current pro-growth tax rates are not extended, more than 90 million households nationwide will face immediate income tax hikes. 115 million Americans will pay higher taxes in some form, and the projected annual income tax increase would be an average of $2,755 per Texan.
Additionally, Congress must take immediate action to repair the Alternative Minimum Tax (AMT). In truth, for many families the AMT is not really an alternative nor a minimum. Congress established the tax in 1969, responding to reports that 155 wealthy households used loopholes to avoid paying any income taxes at all. It set a high income level above which taxpayers were required to pay a set percentage in taxes, rather than filing a traditional tax return. The income threshold has remained largely unchanged since enacted, and has not been appropriately adjusted for inflation.
The AMT may have applied to a few hundred rich household in the 1960’s, but due our economic growth in the last forty years and generally higher incomes, it now traps millions of American families. It has crept down from the mansions of 1969 to today’s suburban middle class homes. If Congress fails to adjust the AMT for inflation for tax year 2007, a family of four earning $60,000 a year could be hit with nearly $2000 in new taxes. In all, 23 to 26 million Americans could suddenly find themselves taxed at the same rate as the super rich. They could even be hit with penalties and interest for underpaying their estimated taxes.
The continued prosperity of our nation depends on the sound policies that we have employed over the last six years. Saddling Texas families and businesses with new taxes would have sharply negative effects on your family budget and our entire economy, and we can afford neither. As your Senator, I will continue to work to ensure low, fair taxes that help Texas families keep more of what they earn.
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