The American economy is on the edge of a precipice that few Americans will realize until we are even closer to the cliff. Some 200 federal tax provisions are set to expire at the end of this year, which would directly lead to a $494 billion tax increase in 2013.
Our entire economy measures only 25 times larger than the tax increase that is rapidly coming our direction. The increases would fall at the feet of families trying to make ends meet, of businesses large and small, of employers holding on to their workforce, and of the Americans who invest in our country, our economy, our agricultural operations and our dreams through bonds, pensions, family businesses and entrepreneurship. Every taxpaying American would owe more.
The economic devastation would be massive as a half a trillion dollars are effectively sucked out of our national economy. The landscape of tax changes would chase investment overseas, force layoffs and discourage Americans from taking the risks which have always made our economy, and our country, formidable.
Worse, the influx of tax revenue to the federal treasury would not even go, as it should, to reduce our massive federal debt. Instead, the current Administration would justify the windfall as an excuse to further increase the size and cost of government.
When we talk about taxes, the basic principle should be one of competitiveness. How do we create a tax code through which U.S. businesses can stand up to overseas competitors? How do we reward hard work with fairness? How do we use the tax code to control the growth and the reach of the federal bureaucracy? How do we encourage investment in America? And, most important, how do we give American families as much control over their own lives and budgets as possible?
These pressing questions are coming to a head in the next several months. If the entire slate of these tax relief provisions is allowed to expire, our nation will immediately bear an enormous cost. It is a national priority both sides of the argument should be able to agree upon: we can have serious disagreement about where tax policy should go from here, but we must not allow it to slide backwards.
When the answers to important tax questions are not resolved in a timely way, the resulting uncertainty for employers and families can effectively paralyze them. Unable to judge how much income they will be able to keep in the coming year, they become unable to spend money on the priorities they need. And without that spending, a vicious cycle of decreasing economic activity begins.
Tax relief is too vital to our economy and our families to fall victim to politically-motivated inaction.
I will be pressing the case for tax relief in Congress, as well as pointing out that the certainty of tax policy is just as important as the content of the law which ultimately passes. This is the job Congress and the President have been asked to do, and while some of us see the danger ahead still others are rowing toward the falls.
When it comes to the $494 billion tax increase on the horizon, we Americans are all in the same boat.
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