While traveling the 8th District and listening to fellow Hoosiers during my first term in Congress, I have reached the conclusion that many constituents do not believe they are getting value for the tax dollars that come out of their paychecks and are sent to Washington, D.C. Furthermore, the taxes collected by the federal government have not gone toward paying down our $16 trillion debt, but to fund more spending and an ever-growing and more intrusive federal government.
The bottom line is this — hardworking Hoosiers and small businesses should not be asked to send more money to Washington, D.C., just to pay for bigger government and increases in spending.
This was the case in 1982. President Reagan agreed to a package that would cut spending three dollars for every one dollar increase in taxes. The reality was the federal government cut less than 27 cents for every one dollar increase in taxes. When leaving office, President Reagan famously joked that he was still waiting on the three dollars in spending reductions. Thirty years later we’re still waiting and, ironically, having the same conversation.
Today, we are hearing similar promises from liberals in Washington, D.C. This much is clear; the president’s plan to raise taxes would negatively affect hard-working taxpayers, small businesses and job creators. It is a slippery slope that ignores fundamental reforms to pay down our national debt. It is a path that leads to more spending, more government and more taxes. I’m afraid the end result would be the same as 1982.
During these fiscal cliff negotiations, we need to discuss comprehensive tax reform and we should focus on spending cuts and the long-term drivers of our national debt.
In addition, we must keep in mind the engines that drive our economy — hard-working Americans and small businesses.
These themes were echoed in a recent Gallup survey released on Nov. 15 that showed 88 percent of respondents state the need to “take major steps to ensure the long-term stability of Social Security and Medicare” and 70 percent saying we should “simplify the tax code to lower rates and eliminate deductions and loopholes.”
During times of crises, the American people have always come together to ensure our nation moves forward in the right direction. This is one of those times.
We must not make the American peoples’ current economic challenges worse by increasing taxes on hard-working families and small businesses. Instead, we ought to pursue fundamental reform of the tax code in order to spur economic growth and increase revenues to the Treasury by providing incentives to create jobs and put Americans back to work.
In an address to Congress in January 1963, President Kennedy understood this simple truth by stating, “Lower rates of taxation will stimulate economic activity and so raise the levels of personal and corporate income as to yield within a few years an increased — not a reduced — flow of revenues to the federal government.”
Over the past 17 years, 65 percent of new jobs were created by small businesses. These same small businesses use their individual tax returns to report their earnings. According to the National Federation of Independent Businesses, “75 percent of small businesses are organized as pass-through entities meaning they pay taxes on their business income at the individual rate.”
What is the result of increasing taxes on small businesses? If the president gets his way and taxes increase on Jan. 1, 2013, the direct result will be more than 700,000 jobs lost, according to a report released by the accounting firm, Ernst & Young.
The currently scheduled tax increase will hit nearly one million small businesses according to the Joint Committee on Taxation. The amount of revenue collected next year from this tax increase would only fund the federal government for approximately eight days. Furthermore, the cumulative revenue collected over the next decade from this higher tax rate will be less than the annual deficits incurred under President Obama during each of the past four years.
During these negotiations to avoid the fiscal cliff, we need to keep in mind that the American people deserve value for their tax dollar. And, with history as a lesson, we need to prevent this nation from going down the slippery slope of bigger government that breaks the promise of spending cuts, as was the case in 1982.
Rep. Larry Bucshon will begin his second term in Congress in January. He is a resident of Newburgh.