WASHINGTON — No piece of legislation before the U.S. Congress requires action more urgently than extending the tax cuts of 2001 and 2003. Failure to act will deal a devastating blow to our fragile economy by slowing growth and killing jobs — at the worst possible time.
If the 2001 and 2003 tax rates are allowed to expire at midnight on Dec. 31, we’ll witness the largest single tax hike in U.S. history — hitting American taxpayers with $400 billion in new taxes in the first year and $4.5 trillion over the next decade.
Marginal tax rates, as well as dividends and capital gains taxes, will rise. This will squarely hit taxpayers — ranging from the investors who pour capital into job creation to retirees and workers planning for retirement.
The estate tax will come roaring back to 55 percent, and the exemption threshold will dip from $5 million estates to $1 million — threatening the livelihood of many small businesses and family farms. In addition to the 2001 and 2003 tax rates, relief from the alternative minimum tax will lapse, along with many vital business tax provisions.
President Obama and many from his party say the 2001 and 2003 tax rates should not be extended for those earning $250,000 or more — the so-called wealthy. But nearly a million successful small and family-owned businesses that file their taxes as pass-through entities will get swept up in the tax hike.
Many of these businesses could see their top tax rates rise from 35 percent to nearly 45 percent. And a heavier tax burden on our nation’s job creators will have a chilling effect on hiring and expansion.