In the July jobs report out last Friday, we found out that almost as many people gave up looking for work all together in the month of July as were able to find a job. In total, 23 million Americans are struggling to find work.
If ever there was a time to change course in our economic policy, the time is now. We can’t wait any longer.
One of the biggest impediments to economic growth right now is the uncertainty which plagues small businesses, budding entrepreneurs and families. Small businesses do not want to expand or hire if the rug could be pulled out from under them just months from now. Budding entrepreneurs cannot find the financing they need to launch their ventures. Families are struggling to make ends meet and worried about the future.
A huge factor in this uncertainty is a $4-trillion tax hike that looms in January when the small business- and middle-class tax cuts of 2001 and 2003 are set to expire.
The nonpartisan Congressional Budget Office has made clear these increases would devastate our already fragile economy and could send us back into a recession. In its analysis, Ernst & Young found that allowing the tax hike would kill 710,000 jobs.
This is not about rich versus poor. Every American taxpayer would see their taxes increase. For example, a family of four earning $50,000 annually would see a five-fold increase in their federal income tax.
Preventing the tax increase is supported by former President Bill Clinton and even President Obama’s own top economic advisor and former Treasury Secretary Larry Summers. This week, it also gained the support of a bipartisan majority in the House that voted to extend the tax relief for one year.
While I voted for the tax-relief extension, providing economic certainty takes more than a patchwork of temporary measures. We need fundamental tax reform that makes our tax code fairer, flatter and more conducive to economic growth.
For this reason, the House also advanced legislation this week to provide a clear pathway for comprehensive tax reform. This measure removes technical hurdles which could be exploited to deny enactment of tax reforms that would lower rates and close special-interest loopholes.
Coupled with spending restraint, commonsense tax reforms would result in the creation of 1 million jobs in the first year alone.
Among them, our effort would eliminate lobbyist loopholes in order to reduce rates for families and employers by replacing the current six tax brackets with just two at 10 and 25 percent. It would make American companies more competitive by establishing a corporate tax rate of 25 percent and moving toward a more competitive territorial tax system.
Our reforms would eliminate the misguided Alternative Minimum Tax, which threatens middle-class families every year because it was not properly indexed for inflation. Finally, they would protect American taxpayers from Washington’s wasteful spending by keeping tax revenue in line with historic norms.
Our plan to expedite consideration of such reform builds on what we know works such as the Trade Promotion Authority, which already is in law and prevents the same type of technical barriers to legislation that open foreign markets to American goods.
Most importantly, it provides American families and businesses with the certainty they need to restart our economy. In three of the last five years, the American people have been threatened with massive tax increases. We can do better.
Kingston represents the 1st Congressional District of Georgia, which includes Bryan County.