(Alexandria,VA) – As details became clearer in the compromise reached between the Presidentand Congressional leaders over extending the 2001/2003 taxpayer relief laws,Pete Sepp, Executive Vice President of the 362,000-member National TaxpayersUnion (NTU) offered the following comments.
“The first thing that canbe said about the tax-relief accord is, at least President Obama andCongressional leaders avoided a disaster – it’s not the prettiest product fromboth ends of Pennsylvania Avenue, but it could have been much uglier. In fact,certain elements of the package might be more attractive than taxpayers wereexpecting just a few days ago. President Obama deserves praise for resistingdangerous economic advice from radical elements in his party.
A two-year extension of allcurrent income-tax rates will definitely help to keep small business andinvestor uncertainty from getting even worse. Preserving the moderate rates oncapital gains and dividends is an especially urgent priority, not only toprevent a year-end market nosedive but to help economic growth climb back toits proper altitude. Enacting an Alternative Minimum Tax patch is likewise aconfidence-builder for tens of millions of Americans who’ve been kept on theedge of their seats at the financial-planning table for too long. Nonetheless,any such confidence these provisions do inspire will begin to vanish monthsbefore their expiration approaches.
The return of the deathtax, albeit at 35 percent instead of 55 percent, will still be an unwelcomesurprise to more than a few family-owned firms, while extending unemploymentbenefits without cutting spending elsewhere may even compound futurejoblessness. A broad-based payroll tax holiday will likely be less problematicthan handing out more stimulus payments, and 100 percent business expensing hassolid promise, though these policies will present economic uncertainty issuesof their own when they expire in just one year.
Assuming this pactsurvives – and that’s not a given – it will be up to the next Congress todeliver more policies that will ensure a strong recovery. This includes seriousspending restraint across the board, aggressive efforts to restructureentitlements, real progress on binding budget rules, and systemic pro-growthtax reform.
In short, the currentCongress could do a lot worse, and the next Congress must do a lot better, ontax and fiscal policy. Both bodies have important work ahead of them.”
NTU is a nonpartisan, nonprofit citizen organizationfounded in 1969 to work for lower taxes, smaller government, and economicfreedom at all levels. Note: additional analyses and commentaries on the2001 and 2003 taxpayer relief laws are available at www.ntu.org or text “FIGHT” to 67292.