The following originally appeared as an op-ed in the Provo Daily Herald. -Team Hatch
On this Tax Day, we know the Tax Man Cometh and over the next few years, boy will he be coming with a vengeance. Because the only way liberals can support European levels of spending is with European levels of taxes. Instead of talking about serious spending cuts to confront our sky-high budget deficits, they are talking about more and more taxes.
If I were handing out a fiscal report card, I'd give the federal government an F. Our deficit this year is on track to exceed $1.4 trillion and is projected to exceed $700 billion every year over the next decade.
The national debt will almost triple from last year's level to more than $20 trillion by 2020, reaching an astonishing 90 percent of the GDP.
The nonpartisan Tax Policy Center has issued a revealing paper demonstrating that to reduce the deficit to 3 percent of GDP, the top two tax rates would have to be raised to 72 -- and 77 percent.It's pretty clear the Obama administration's favored way of raising taxes -- soaking the rich -- isn't viable.
Tax rates this high are simply not feasible or sustainable. They would cripple economic growth,and they would not be effective in lowering the deficit.
But there's another, more immediate threat looming on the horizon: Unless Congress acts to prevent it, on New Year's Day 2011, American taxpayers will wake up facing tax increases of unprecedented size, sending a dangerous jolt through our still teetering economy.
These job-killing increases include a 33 percent increase in the capital gains tax rate, an almost tripling of the top tax rate on dividends, a 50 percent cut in the now-$1,000 per-child tax credit, and double-digit increases in the top income tax rates -- hitting small businesses, which are often the first to begin hiring in a recovery.
The net effect would be a staggering blow to America's job-creation machine, which is just now beginning to show some signs of life.
These increases are on top of more than a half trillion dollars in new taxes in the recently-enacted health care bill. Moreover, like the new health care taxes, the 2011 increases will hit middle-class families despite the president's promises.
As if this were not enough, there is more bad news. Liberals in Congress and in the Obama administration are floating the idea of a European-style Value Added Tax.This insidious tax is particularly dangerous because it is so easy to turn it into a cash machine without taxpayers knowing what hit them.
American businesses, investors and families have no idea what kind of tax rates they'll face in just nine months. This uncertainty hurts our recovery, and stops investment in critical jobs.
If we hope to avoid this economic catastrophe, Congress and the president must act now to prevent these tax increases from going into effect. Second, we have to take job-killing, growth-sucking tax increases like a VAT off the table.
And finally, we must come together to simplify our tax code and make it friendlier to small businesses so we, as a nation, can more effectively compete in the world.
Furthermore, we have to bring fiscal sanity back to Washington. It's clear we don't have a revenue problem -- we have a spending problem. Federal spending in 2020 is expected to be 25.2 percent of GDP -- about $1.2 trillion higher than the 20 percent that has been the norm in the postwar era.
Here's the bottom line: Let's stop the tax hikes, reduce spending and bring some stability and sanity back to our country.
That's what Utahns and Americans are demanding -- and it's time we start listening to them.
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