BLOGROLL

The following originally appeared as an op-ed with Charles Schumer in The New York Times. -Staff

With national unemployment rate at 10 percent, and more than 15 million Americans looking for work, ideas to spur job creation are at the forefront of everyone's minds. While we may represent different political philosophies, we recognize that high unemployment -- particularly long-term unemployment -- is not a liberal problem or a conservative problem; it's a national problem that takes a huge toll on families.

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Tomorrow Senator Hatch is hosting a forum in Salt Lake City with Governor Herbert on the issue of our national energy policy. In particular, they're going to examine the impact of the cap-and-tax -- also known as "cap-and-trade" -- energy policy that Democrats in Washington are pursuing.

Earlier this summer, the U.S. House of Representatives passed this bill, and it is now being considered in the U.S. Senate. This forum tomorrow will specifically look at how this energy tax policy will impact the state of Utah and its citizens.

If you would like to attend, please see more details below.

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The following originally appeared as an op-ed in The Washington Times. -Staff

Major policy changes in the United States require the support of the business community.

This is exactly as it should be. After all, entrepreneurs, partnerships, family businesses, public corporations and multinational enterprises are the foundation on which our nation has built the greatest economy in the world -- an economy that has brought unprecedented prosperity to Americans.

This is exactly what is happening right now, as the business community appears poised to get behind health care reform plans proposed by the Obama administration and congressional Democrats.

There is nothing wrong with supporting health care reform. Our current system spends too much, covers too few and provides too little for the money we invest in it. We need reforms that transform the delivery system into one that favors high-quality outcomes at lower costs; covers more Americans with quality, portable insurance; and provides better tools to help them navigate the choices and decisions in the health care system.

Responsible, bipartisan reform could greatly benefit the business community by reducing the burden of providing health care, strengthening the private insurance system and reining in the runaway federal costs of Medicare and Medicaid, both of which are headed toward insolvency.

However, reform could carry real costs to the business community as well. Employers might face a play-or-pay soft mandate or an even more costly hard mandate to provide politically determined health benefit packages.

Financing expensive coverage options such as a new public plan could mean price controls and higher marginal taxes on businesses organized as pass-through entities. Recently, some also have floated the idea that eliminating the deferral of taxes on foreign-source income could serve to finance health coverage expansion.

Eliminating deferral is a bad idea, as the evidence shows. As of 2008, three countries still used some sort of worldwide system: Japan, Great Britain and the United States. This year, Japan and Great Britain announced plans to shift to a territorial system. At precisely this moment, then, the Obama administration is proposing a dramatic step in exactly the opposite direction.

We know what will happen as a result. After all, the federal government has taken this ill-considered path before. When taxes were reformed in 1986, the United States eliminated deferral for the shipping industry, and in short order, all of the shipping industry fled this country and established headquarters abroad. The same thing will happen across the board if we repeal deferral.

The reality is simple: If the United States wants to continue to prosper, it has to allow American business to compete. When we tax our businesses more heavily than our competitors tax theirs, our firms have the deck stacked against them in capturing the foreign markets where 95 percent of the world's consumers shop. Our jobs and standard of living will suffer.

So eliminating deferral would be unattractive and even devastating to our business community. The same would be true of raising marginal tax rates, stripping workers of a private ballot in unionization decisions, initiating protectionist trade policies and running roughshod and unconstitutionally over the sanctity of private contracts. The business community, which is so central to the success of policy reforms, rightfully would object to the pursuit of these wrongheaded initiatives.

Why, then, is the business community supporting a blank check on health care reform? It can, should and will be a major player in the reform debate. That role should be to ensure that reform adheres to key principles: First, cost and quality must be top priority; second, there must be a path to greater quality insurance coverage, but any new private sector resources must be devoted to expanding private insurance; and finally, every participant must have greater information and support than at present.

Support for the right kind of health reform will meet the dual goals of improving the health care system and preserving the engine of U.S. economic success.

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During a Senate Finance Committee hearing yesterday, Senator Hatch grilled economists on the impact of the Democrats' cap-and-tax scheme.

Here are a few of the questions and answers with Anne Smith, Practice Leader of Climate and Sustainability of CRA International:

Q. Do you believe that implementing a cap-and-trade program or a carbon tax would result in net job losses?

A. Yes

Q. Some climatologists believe that implementing a cap-and-trade or a program that would reduce carbon emissions by 83 percent in the year 2050 would reduce temperatures by only nine-hundredths of 1 degree Fahrenheit. Are we sacrificing million of jobs in order to reduce climate change by nine-hundredths of 1 degree?

A. The precise level of U.S. emissions will not affect climate risks in any quantifiable way if they are on a general track towards near-zero emissions. This is particularly true because global climate outcomes over the next century will be determined by controls on developing country emissions much more so than by a few percentage points of difference in U.S. emissions during the next couple of decades.

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Many tax code problems exist solely because tax brackets, limits and deductions haven't kept pace with inflation. One of those areas is the limit for the deduction of capital losses.

Senator Hatch and Senator Blanche Lincoln introduced a bill Tuesday to fix this problem with the tax code, The Desert News reports:

Amid the recession's body-slam on stock-market prices, Sen. Orrin Hatch has introduced a bill to increase significantly the amount of capital losses that individual taxpayers may deduct in a year.

The bill, which Hatch is pushing with Sen. Blanche Lincoln, D-Ark., would allow deducting $10,000 in such losses against ordinary income, up from the current $3,000 limit. The new $10,000 limit would then also be increased each year automatically to match inflation.

To understand the bill, it helps to remember that investors may receive ordinary income on assets, such as dividends and interest. They also may have capital gains if they sell their stocks or bonds for more than they paid for them. A capitol loss occurs when people sell their investments for less than they paid originally.

Capital losses now can be offset against capital gains without limit. However, current law limits the amount of capital loss that can be deducted against ordinary income to $3,000 a year.

Unused capital losses can be carried over to future years indefinitely, where they can be used against future capital gains or to offset, again, up to $3,000 in ordinary income a year in the future.

"This is a question of fairness," Hatch said. "Allowing individual investors to deduct only $3,000 per year when their total losses may come to many times that much is simply not fair. The tax code taxes gains without limit, so it should not place such a restrictive limitation on losses."

With the 39.3% loss in the S&P 500 last year, many individuals have been limited in their ability to deduct their losses when they sold his or her investment (stocks, bonds for example) for less than what was paid for it.

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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

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Senator Hatch was on Don Imus' radio show yesterday, where he discussed President Obama's budget, cap-and-tax plan and the Employee "No" Choice Act.

"The Democrat budget promises to not raise taxes on 95% of Americans, but, then, it indirectly raises the cost of living by taxing gas, businesses and jobs."

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My priorities as Senator are to:

• Give taxpayers back more of what they earn
    
• Work for a country in which children can be safe, healthy, and well-educated
    
• Defend Constitutional rights
    
• Cut down the size of a bloated government bureaucracy
    
• Empower the military with the tools to fight terror and tyranny
    
• Embody the time-honored principles of integrity, honesty and candor

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