Every April 15th reminds us of the necessity of raising revenue to operate our government. Most will agree that taxes are the price we pay for a civilized society. It is not that we have to pay taxes that brings you all here today, but rather the fact that we have to pay so much. Simply put, the Federal government should spend less so that we are not taxed so much. However, under the proposed budget of President Obama and the Democratic Majority in Congress, we are moving in the wrong direction.
Erwin Griswold, former solicitor general under Presidents Johnson and Nixon, once said, "We have long had death and taxes as the two standards of inevitability. But there are those who believe that death is the preferable of the two. At least, as one man said, there's one advantage about death; it doesn't get worse every time Congress meets."
Unfortunately, the proposed Obama budget would lead to taxes getting worse. In fact, they would get much worse, and not just for the so-called "well-off and well-connected," as the budget refers to those who are targeted for explicit tax increases.
Rather than cut taxes for 95 percent of Americans, as the President promised, the budget includes a number of tax increases that would directly and indirectly hit lower and middle income wage earners, as well as the so-called wealthy. I refer to them as tax hikes on America's industrial output and energy, tax hikes on America's job creation, and tax hikes on America's competitiveness.
The first proposal is designed to deal with climate change, and would effectively place as much as $1.9 trillion in new taxes on energy and industrial companies throughout America. These businesses would have to either pass these gargantuan costs on to their customers and employees, or go out of business. The taxes would show up in the form of higher utility and other energy bills, higher costs for consumer goods, lost jobs, and a lower standard of living for everyone.
The second proposal would undermine the already-weak stimulus bill enacted in February by increasing taxes that would stifle job creation. It would do this by raising taxes on capital gains, dividends, and the top individual rates, where most small business income is taxed. Small businesses create about 70 percent of all jobs. The nearly 200,000 small businesses in Utah, and millions more across the U.S., cannot generate substantial job growth if they face big tax increases.
The third way the Obama budget assaults job creation is by attacking America's competitiveness in the global economy.
Beyond strengthening job growth through small businesses, we must also create an environment that encourages companies to invest in the United States and also to expand worldwide to meet growing opportunities. According to last year's listings of the world's largest companies, the so-called Global 500, only eight of the top 25 corporations in the world were headquartered in the United States. Forty years ago, almost all of the top 25 were American firms.
Our system of worldwide taxation, coupled with one of the highest corporate tax rates in the world, is enough to cause any firm to think twice about locating or keeping its worldwide headquarters and jobs here. And this is before the changes included in the Obama budget, which would make the business landscape far less friendly.
Taxes are already too high, and we need to find a way to lower them and to lower our irresponsible federal spending. Instead, the new Obama Administration and its supporters in Congress are choosing this time of severe recession to announce more spending and higher taxes.
The spending in this budget is so massive that independent estimates suggest roughly 250,000 new federal bureaucrats may be needed to spend it all.
Washington should do what millions of Utahns and other Americans are doing to weather the financial storm -- find ways to cut and make do with less. By cutting wasteful spending, eliminating ineffective government programs, and dealing with our long-term entitlement crisis, we can put our fiscal house in order without raising taxes.
I join in your outrage in the direction our country is headed. I am fighting in Washington to stop tax increases and to find ways to reduce growth in spending. That is why I filed an amendment to the budget on the Senate floor that would limit government spending to 20 percent of Gross Domestic Product, which has been the historical average. Given today's out-of-control spending in Washington, we are seeing this historical average of 20 percent being abandoned for 29 percent on the way to 39 percent. Continued spending and tax increases to support it will lead America down the same dead-end road that many European nations have gone down -- leading to the Europeanization of America.
I plan to introduce legislation that would install a cap of 20 percent of GDP on all future spending, and I call on all Utahns, and other Americans who love their Country, to support this effort. Lower spending should lead to lower taxes and I am convinced a hard cap on spending may be the only answer that Washington politicians understand. We need to instill fiscal constraints to ensure a responsible budget.
I appreciate your willingness to show your strong feelings on this vital issue and wish you well as you continue your efforts to secure the future for our children and grandchildren.
Sincerely,
Orrin G. Hatch
United States Senator
