President calls for one-year extension of cuts for those earning less than $250,000 a year
By Lorie Hailey
LEXINGTON, Ky. (July 9, 2012) — The U.S. Chamber of Commerce is calling on business owners and individuals to encourage Congress to extend the Bush-era tax cuts set to expire Jan. 1.
“The expiration of the 2001 and 2003 tax rates coupled with sequestration cuts in 2013 could very well drive our fragile economy back into a recession,” the U.S. Chamber says in a website called “Fiscal Cliff Countdown.”
The site has a countdown to Jan. 1 — when the tax cuts expire, a function to email Congress, and offers tax tools, including a calculator to find out how much taxes an individual or business would pay after the cuts expire.
“Congress must act now to prevent the largest tax increases in American history from taking effect, as well as enact fundamental tax and spending reform that will drive American competitiveness and growth in the long term,” the site reads.
A draft letter to Congress, which is provided when a visitor clicks on the “Contact Congress” link, tells legislators that economists from across the political spectrum warn that such tax increases and spending cuts would have a devastating effect on a still sputtering U.S. economy, possibly returning it to recession.
The so-called fiscal cliff — a package of spending cuts and the removal of tax breaks — could add up to about $7 trillion. The tax breaks that would end include the Bush tax cuts, middle class protection from the alternative minimum tax, and more than 50 “temporary” tax breaks for individuals and businesses.
“Legislation must be enacted to extend all of the 2001 and 2003 tax rates (including current marginal rates, dividend and capital gains rates and estate tax relief), to extend vital expired and expiring business tax provisions, and to provide alternative minimum tax relief,” the U.S. Chamber’s draft letter says.
The letter also encourages Congress to develop a long-term plan to address excessive spending, particularly entitlement spending.
On Monday, President Barack Obama, who signed a bill in 2010 to extend all of the Bush-era tax cuts until the end of 2012, called for Congress to pass a one-year extension of cuts for people earning less than $250,000 a year, but not for the wealthiest Americans.
Obama’s proposal would maintain the current lower tax rates for families making up to $250,000 for another year, while allowing tax rates to return to 1990s levels for those earning more.
“Let’s not hold the vast majority of Americans and our entire economy hostage while we debate the merits of another tax cut for the wealthy,” Obama said at the White House.
A top Obama campaign advisor, Robert Gibbs, said Sunday that the president is dedicated to ending the Bush tax cuts for the wealthy at the end of the year, according to CNN.
Andrea Saul, the Mitt Romney campaign spokesperson, criticized the announcement, calling it more bad policy from the president in the wake of the weak June jobs report, CNN says.
“In the wake of another weak jobs report, the president is doubling down on his quixotic call for the same small businesses tax hikes that have been routinely rejected by the House and Senate,” House Speaker John Boehner, R-Ohio, said in a statement Monday. “How will these small business tax hikes create jobs?”
House Republicans plan to vote later this week on a permanent extension; the Democratic-run Senate is not expected to follow suit, according to USA Today.
Senate Minority Leader Mitch McConnell, R-Ky., has called for a one-year extension of all the Bush tax cuts while Congress seeks to revamp the entire tax code.
McConnell said the president’s proposal is “clearly based on a political calculus, not an economic one.”
Lorie Hailey can be reached at [email protected]