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  • A Fiscally Responsible Tax Extenders Bill

    Senator Harry Reid (D-NV)

    Monday, Senate Majority Leader Harry Reid (D-NV) filed cloture on the tax extenders package. The bill would extend a variety of tax provisions that expire yearly and require Congress to pass them annually to prevent tax increases for many taxpayers, further extend unemployment benefits, and prevent a 21 percent decrease in payments to doctors that treat Medicare patients – the so-called “doc fix.”

    The extension of the expiring tax provisions is a long-overdue exercise for Congress and should be relatively uncontroversial. But Congress – as usual – could not restrain from adding $126 billion in new spending to an otherwise necessary bill.

    Some of that spending includes billions for bailouts to states, Build America Bonds, and a Medicaid bailout.

    In addition to the irresponsible new spending, the bill would needlessly increase taxes by almost $50 billion over 10 years to offset the cost of extending tax-reducing provisions. But preventing a tax hike is not a tax cut and therefore should not require an offset.

    Even with all the tax hikes, the bill still adds $79 billion dollars to federal deficits over the next ten years. In a year when the federal deficit is already projected to reach $1.5 trillion, simply piling on addition debt hardly seems to best course for the nation. The $126 billion in new spending should be stripped out, and a clean bill should be sent to the President.

    Fortunately for taxpayers, another option is available. Senator John Thune (R-SD) has offered an amendment that incorporates nearly all of the major policy priorities in the extenders package and cuts spending. According to Senator Thune, the amendment would:

    • Extend unemployment benefits until November, just as the current version does,
    • Extend the expiring tax provisions,
    • Include no tax increases,
    • Fully pay for the bill with spending cuts including rescinding $37.5 billion in unobligated stimulus funding, and cutting $113 billion in unnecessary spending,
    • And include an additional year of the “doc fix,” extending the payments through 2012 instead of 2011 under the current version.

    Recent polling reveals just how serious the American people take the rapidly increasing federal debt. The time has come to listen to the American people, and the Thune amendment is a good place to start.

    Posted in Economics [slideshow_deploy]

    7 Responses to A Fiscally Responsible Tax Extenders Bill

    1. Kevin Habib says:

      The Thune amendment is perhaps the most dangerous piece of legislation I've seen in years. It's disturbing to see what effect his amenment would have.

      The cuts Sen. Thune is requesting (which can only come from funds not already legally committed) would shut down the government for last half of July and all of Augsut and September.

      I guess if you want Social Security checks to stop going out or our food to stop being inspected or mines to stop being inspected, it is ok. The amendment amounts to an irresponsible and radical approach to dealing with economic and budgetary problems.

      Also, if the public feels the biggest issue facing the nation is debt and deficits, isn't that a HUGE sign of how much the economy has improved since the new Congress and President took over. The economy and recession was by far the biggest issue two years ago. It says a great deal that the American public is no longer concerned about the recession and direction of economy – shows me that an awful lot that was broken under the Republican President has been fixed.

    2. Reality Check, GA says:

      You left out one very important aspect of the Thune amendment-it basically shuts the Government down from mid July to September 30-which is the end of the fiscal year for the Government.

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    4. GreenTraderTax.com says:

      • Skip this job-killing bill entirely. Even if you reduce spending – a must – you still have nasty tax increases placed on job creators like small business professionals operating in S-corp structures. That nasty Medicare tax will heap 3% more taxes on those small businesses now and 4% in 2013 with the health care tax increase. This bill also takes revenge on hedge fund managers, venture capitalists and real estate managers with a nasty repeal of carried-interest tax breaks. These managers have skin (capital) in the game and many are being sued for losses in their funds during the nasty recession (coughing up their own capital to cover it). Capital deserves capital gains and their skin in the game is capital. All these types of funds are under distress now with lower returns, losses and problems due to Meltdown 2.0 contagion in Europe and a potential double-dip recession in Europe and even here in the U.S. too. Now is not the time to take tax retribution/redistribution. Why redistribute taxes from job creators (professionals and investment managers) to people who won't pick themselves off the dole-out unemployment lines already. Extending unemployment insurance forever is not fair to taxpayers who work hard every day to pay taxes and keep smaller and smaller net amounts.

      One reason Congress will redo this bill is to beef up their attack (tax increases) on oil companies to pay more of this run away spending. They will block drilling in the Gulf too and get more people fired, bringing another great US and global industry to its knees. Good luck collecting taxes with declining growth. This bill will be known as a "kiss-campaign-contributions-goodbye" bill, as professionals, small businesses and investment managers will no longer support the enactors. Any tax bill will face a rocky road before the midterms and voters will carve these mistakes in stone in their minds. You don't have to be a tea party supporter to kick the incumbents out. Just kill this bill entirely!

    5. LALaw, Los Angeles says:

      I don't remember any suggestions from you guys on what to offset for new spending during the Bush years. Maybe you guys at Heritage can help me and put together a collection of your articles when Bush was enacting a $400 billion plus prescription drug benefit on what he should offset.

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