One of the tasks assigned to the Deficit Reduction Committee is to recommend tax reform that includes changes to the tax code in order to build revenue and to pay for tax credits in order to build the economy. After the Senate voted procedurally this week to reject the President’s jobs bill, Democrats are considering breaking the package into smaller, more appealing pieces. It’s not clear if they would still attempt to offset these smaller bills of spending and tax cuts with targeted tax increases. The two parties are severely divided over the matter of proper distribution of the federal income tax. What Democrats call “the wealthiest paying their fair share” is called “class warfare” by Republicans.
Historically payroll tax cuts were popular among both parties. Republicans now fear expanding or extending payroll tax cuts, which reduce Social Security tax rates, will hurt Social Security trust funds and effectively create a tax increase in 2013 when the cuts expire. House Republicans seem to like President Obama’s proposal to expand tax incentives for companies that hire unemployed veterans. Both parties seem interested in a “tax holiday,” which would temporarily reduce taxes on earnings that companies bring home from their operations in other countries, but the President opposes that idea. Currently, multinational companies can delay paying income tax on most of their offshore earnings indefinitely, until they bring that money into the United States. Tax incentives or tax holidays mean loss in tax revenue, and thus an offset is required by way of cuts to something else or new revenue.
The House Transportation and Infrastructure Subcommittee on Highways and Transit held a hearing Wednesday to debate the merits of the National Infrastructure Bank component of the American Jobs Act. During the debate some spoke of the need for a gas tax, vehicle miles traveled tax or a tax by way of tolls to help offset the costs of desperately needed national infrastructure investments.
With all this talk about changes to the tax code in so many different ways, can any of us really be sure we will not ultimately pay more taxes in some form or another in order to help our country crawl out of debt? Is a pledge of no new taxes under any circumstances, and only cuts to spending, realistic? If funding to create and maintain parks, for example, is cut drastically or eliminated and local, state and federal parks were forced to initiate or raise park fees as a way to fill the void, is that not a form of new taxes? Call them fees, tolls, tariffs, levies, dues, or duties, the question remains the same. Are you willing to pay more taxes?
Leslie Mozingo from the Ferguson Group