Americans face taxing burden
Tax Day -- April 15 -- is dreaded by taxpayers across the country.
Whether it's the mountains of paperwork some pore through to file their taxes or the fact some have to send more of their hard-earned money to Washington, few people find April 15 to be an enjoyable experience.
I often hear from South Carolinians encouraging me to find some way -- any way -- to make Tax Day less burdensome.
Taxpayers are frustrated and with good reason.
Congress has repeatedly drug its feet on making the 2001 and 2003 Bush tax cut permanent, while the sheer length and complexity of our current tax code is mind-boggling. And calls to move toward a simpler, easier to understand tax system go unanswered.
In 2001 and 2003, President Bush brought forward a tax relief package designed to reduce the burden on taxpayers. Tax rates were cut across the board allowing working Americans to keep more of what they earned. We eliminated the marriage penalty, the quirk in the tax code which forced married couples to pay more in taxes than they would if they filed as individuals. Taxes on dividends and capital gains were reduced, encouraging people to invest for the future. The child tax credit was doubled to $1,000 and we put the dreaded death tax on a path to extinction.
It was the right medicine for an ailing economy and the results were clear. By lowering taxes, the federal government spurred economic development and actually collected more in tax revenue. Since 2004, tax revenue has steadily increased as a percent of gross domestic product and is currently around historical averages.
The tax cuts have been good for South Carolina as well. If the tax cuts expire, the average family would pay an additional $2,300 per year. Seniors would pay $2,200 and small business owners would see their tax bill increase $4,100.
I believe some of the uneasiness taxpayers feel today about the economy is driven by concerns they are going to be hit with huge tax increases when the tax cuts expire. The day of reckoning, 2010, is rapidly approaching, and if we don't extend the tax cuts Americans will be confronted with the largest increase in personal income taxes since World War II.
Earlier this year I introduced an amendment to the Senate budget resolution which makes the Bush tax cuts permanent. Unfortunately, it was defeated in a near party-line Senate vote of 47-52. I'll pose to you the same question I posed the members of the U.S. Senate. With uncertain economic times ahead, does it make sense to raise taxes on Americans who are already struggling to make ends meet?
I'm confident the U.S. Senate's answer is not the same as taxpayers in South Carolina.
Making the Bush tax cuts permanent is the short-term goal, but if our nation wants to remain prosperous to come, we need a clear, long-term plan to reform our broken, outdated tax code.
The new global economy requires a tax code which makes us competitive.
There are many exciting and varied proposals which have been put forward. Many in South Carolina and across the nation favor a Fair Tax, while others support a flat tax. Some express support for a value added tax (VAT) or other system. The proposed ideas are as varied as our state, but the one thing they all have in common is the belief the current tax code is completely broken and beyond repair.
Unfortunately, before we can move forward to adopting any of these exciting possibilities, we have to get rid of the current tax code. History has taught us that if we do not impose a deadline and terminate the tax code by a certain date, we will never get to the fundamental tax overhaul that is so desperately needed.
The Tax Code Termination Act, of which I am a co-sponsor, is based upon the same premise as the Base Closure and Realignment Commission (BRAC) that closed unnecessary military installations. It will sunset the current tax code and create a commission charged with reporting to Congress reform options. All ideas would be on the table.
In addition to the flat tax, Fair Tax and other ideas, it would also determine if tax systems in use in other nations could provide a more efficient and fair method of taxation here at home. I believe the Tax Code Termination Act is the first step our nation must take toward fundamental, long-overdue tax reform.
It's time for our nation to implement a bold and ambitious tax agenda for both the short and long term future of our country. Working together, I am confident we can lower the tax burden in future years and move our nation toward a tax system which makes us competitive in the global economy.
This article was originally published at http://greenvilleonline.com/apps/pbcs.dll/article?AID=/20080415/OPINION/80415023/1004/NEWS01.