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A Fiscally Responsible Tax Extenders Bill

Posted By Stephen Keen On June 16, 2010 @ 10:00 am In Economics | Comments Disabled

Senator Harry Reid (D-NV) [1]

Monday, Senate Majority Leader Harry Reid (D-NV) filed cloture on the tax extenders package [2]. 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.” [3]

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. [4]

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. [5]

Even with all the tax hikes, the bill still adds $79 billion dollars to federal deficits [6] over the next ten years. In a year when the federal deficit is already projected to reach $1.5 trillion [7], 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 [8], 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 [9] 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.

Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2010/06/16/a-fiscally-responsible-tax-extenders-bill/

URLs in this post:

[1] Image: http://www.foundry.org/wp-content/uploads/100212-sen-reid-wistful.jpg

[2] tax extenders package: http://blog.heritage.org../2010/05/27/tax-extenders-bill-still-contains-irresponsible-spending-increases-and-dangerous-tax-hikes/

[3] “doc fix.” : http://blog.heritage.org../2010/05/25/obamacares-cooked-books-and-the-doc-fix/

[4] bailouts to states, Build America Bonds, and a Medicaid bailout.: http://www.heritage.org/Research/Reports/2010/05/Routine-Tax-Extenders-Package-Contains-New-Irresponsible-Spending-and-Tax-Hikes

[5] preventing a tax hike is not a tax cut and therefore should not require an offset.: http://www.heritage.org/Research/Reports/2009/12/Tax-Hikes-Unnecessary-for-Extension-of-Current-Policy

[6] adds $79 billion dollars to federal deficits: http://www.cbo.gov/ftpdocs/115xx/doc11557/sa4301.pdf

[7] projected to reach $1.5 trillion: http://www.cbo.gov/ftpdocs/112xx/doc11231/budgetprojections.xls

[8] According to Senator Thune: http://thune.senate.gov/public/index.cfm?FuseAction=PressReleases.Detail&PressRelease_id=3b86ee99-7e55-4c9f-baeb-6ecf96e0c570&Month=6&Year=2010

[9] Recent polling reveals: http://blog.heritage.org../2010/06/10/national-debt-now-tops-american-fears/

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