WASHINGTON, DC – U.S. Senator Pat Roberts took to the Senate floor last night to urge Congress to extend the tax relief set to expire at the end of the year. Continuing this tax relief will benefit all taxpayers and provide certainty for small businesses to create jobs and get the economy back on track.

“The looming tax increases that will take effect next year will hit every American who pays income taxes,” Senator Roberts said. “This tax relief, which was passed on a bipartisan basis, and supported by several Senators in the Majority who are still serving in the Senate, has benefitted families and small businesses across income levels. This tax relief doubled the child tax credit from $500 to $1,000. This credit amount will be cut in half next year. The bill lowered capital gains and dividend tax rates to benefit families who invest long-term and save for their future. Those taxes will go up dramatically next year – by as much as 33 percent for capital gains and 164 percent for dividends. The bill lowered income tax rates for every taxpayer who pays taxes – whether you’re a lower income taxpayer, a middle income taxpayer, or an upper income taxpayer.

“Here are just a few examples of what this will mean to working families if the majority allows these provisions to expire: A single parent with two children who earns $30,000 will see a tax increase of $1,100 per year. A family of four that earns $50,000 will see a tax increase on an average of $2,100 per year. Clearly, these families are earning well below the $250,000 threshold on which the president promised to not raise taxes. Yet, in just thee months, that’s exactly what is going to happen. The president’s supporters in Congress have yet to introduce a bill to prevent this tax hike. It’s just that simple.

“However, the president and his supporters in Congress say they want to extend tax relief for everyone but those taxpayers they say are wealthy. Who are those taxpayers? Well, under the president’s proposal and presumably the proposal supported by most in the Majority, it’s any individual who earns more than $200,000 in income per year or any family who earns more than $250,000.

“To see the harm in raising the top two tax rates, to target those earning over the $200/$250,000 threshold, we only have to look at what allowing this tax relief to expire means for small businesses.

“Because many small business owners pay their taxes on their individual income taxes, if the top two income tax rates are increased as the president proposes, small business owners in these tax brackets will pay those higher income taxes. Keep in mind, these are the same businesses, that, by the president’s own admission, are the nation’s job creators. They create 70 percent of the jobs in this country. Yet the president’s proposal raises the marginal tax rate by at least 17 percent on small businesses.

“According to the non-partisan Joint Committee on Taxation, that means that three-quarters of a million businesses – 750,000 small business – will pay higher taxes. Allowing the top rates to expire subjects nearly $500 billion – half a trillion dollars – in small business income to higher taxes. These small businesses will have to recover the cost of higher taxes somewhere. Will it come from lower wages? Will they lay off workers? Reduce benefits? Or, raise the costs of their products? None are good options.

“With unemployment holding steady at over 9 percent, common sense tells us that raising taxes on those businesses that are creating jobs is a bad idea. As small businesses face a significant tax hike come January workers will inevitably pay the price. By one estimate, an increase in the top tax rate could cost jobs by reducing small business hiring by as much as 18%.

“The administration says that it wants to help small businesses, and it’s touted the recently passed small business bill as proof of that. Yet this same administration pushes through a health care bill that American’s don’t want, that imposes higher taxes on small businesses. Now it wants to raise taxes even further on these same small businesses by increasing their federal income taxes. The members of the Majority who supported the small business bill and who insisted that we must provide them tax relief, are the same ones who oppose extending income tax relief that will benefit small businesses. I’m not sure how they explain this contradiction and I’m pretty sure that voters don’t understand it either. If it is so important to provide tax relief to small businesses in this bill, why isn’t it equally important to extend other small business tax relief?

“We will not get our economy back on track until small businesses begin hiring. And they are not going to hire if they have to pay more taxes in January on top of what they’ve already been burdened with in the health care bill. Yet, that’s precisely what the administration’s proposal will do. This approach by the president and the Majority is absolutely the wrong approach to take if we want to encourage job creation and grow our economy.

“The popular refrain Americans have heard from the president and his supporters in Congress is that they inherited the current deficit and that it is a result of the tax relief we passed, on a bipartisan vote, in 2001. But again, the numbers just don’t add up for them. Did you know that the federal deficit decreased as the 2001-2003 tax relief took effect? The deficit stood at $412 billion in 2004, but dropped to $161 billion in 2007 – the year that the Majority took control of Congress. Now just three short years later, the deficit is estimated to come in at approximately $1.3 trillion. That's a direct result of the massive spending agenda that the president and his supporters in Congress have undertaken – including a failed stimulus bill and bailouts of failed companies. Yet the president has already said that he doesn't plan to pay for the cost of extending about 74% of the expiring tax relief – that's about 2 trillion dollars – that benefits lower and middle income taxpayers. And, that number is actually expected to go higher. However, the remaining 26% of the tax relief, that tax relief that in part benefits small businesses, the president doesn't want to extend.

“A recent observation by Kevin Hassett and Alan Viard, with the American Enterprise Institute writing in the Wall Street Journal, sums this up quite nicely, “The administration is right to view the deficit as a serious issue, but this sudden commitment to fiscal responsibility is bizarrely inconsistent. The administration professes deep concern about the $700 billion revenue loss from extending the tax cuts at the top, but apparently views the revenue loss of nearly $2 trillion from extending the tax cuts for the middle class as too inconsequential to mention. Nor has the administration's concern about the deficit driven it to reduce federal spending.”

“And that is the key. It disingenuous for the administration to say we cannot afford to provide tax relief that helps small businesses and gets our economy moving in the right direction when the same administration has pursued failed policies of unrestrained spending that do little but grow the deficit.

Roberts concluded, “We can and should continue tax relief to all taxpayers – tax relief that helps families keep more of their hard-earned dollars and tax relief that provides certainty to small businesses so they can make investments and create jobs without the fear that their taxes will go up. We need to extend this tax relief that keeps money in the hands of families and small businesses, rather than putting it in the pocket of Uncle Sam.”

Senator Roberts is a member of the Senate Committee on Finance.

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