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Capitol Comment
by Senator Kay Bailey Hutchison
Low Taxes, Sound Policy
April 13, 2007
It is tax time again. President Ronald Reagan fittingly described the taxpayer as “someone who works for the federal government but doesn’t have to take the civil service examination.” Some people have also noticed that when you combine the words “THE” and “IRS,” it spells “THEIRS.” I have always supported a limited role of government and worked to ensure that more of what you earn remains “YOURS.”
In the last six years, tax cuts have spurred job growth and families have been able to keep more of their money. Measures enacted include increasing the child tax credit from $600 to $1,000 per child, eliminating the unfair marriage penalty that discriminated against married couples who file jointly, and my legislation creating the Homemaker IRA, which allows spouses who do not work outside the home to save for retirement through an individual retirement account. I have also supported lowering all individual tax rates, which has been critical to stimulating the economy.
I have also continually pushed for legislation to allow Texans to deduct their state sales taxes. Residents in states where revenue is collected through state income taxes have long been allowed to deduct those taxes on their federal tax returns, and I believe it is a matter of equity that eight states with no income tax have the same deductions of sales taxes. This January, on the first day of the 110th Congress, I introduced a bill to make this deduction permanent, and when the Senate considered the 2008 Budget Resolution, I offered an amendment to permanently secure the deduction. I will not relent until a permanent sales tax deduction is signed into law.
Back in 2001, even before 9/11, the U.S. economy was contracting, unemployment was rising, and tax revenues were falling. Budget surpluses were turning into deficits. To jump-start our economy, Congress passes one of the largest tax cuts in American history. Then, we followed that with additional targeted tax cuts in 2003.
Thankfully, tax relief enacted in 2001 and 2003 has stimulated our economy, fueled growth, and significantly reduced the deficit. Since the tax cuts took full effect, we have created 7.8 million jobs (more than in all the other major industrialized countries combined), and collected record tax revenue. As a result of the accelerating pace of tax revenue, we expect to eliminate the deficit as soon as 2012. This tax relief has clearly charged our economy, and now I’m working with others in the Senate to make it permanent.
However, many of these provisions are set to expire in the next few years. If this is allowed to happen, the American people will be hit with a massive tax increase, which will jeopardize the gains of the past several years and severely threaten our economy. Estimates show that allowing this relief to expire would result in over 75,000 Texans losing their jobs and our state suffering an $8.3 billion hit to its economy. The average tax increase per Texan would be $2,755.
The tax cuts of 2001 and 2003 have been incredibly successful, and both taxpayers and the federal government continue to reap the benefits of sound fiscal policy. Faithful stewardship of your taxpayer money is one of Congress’ most important duties. We are reminded of the importance of spending your tax dollars wisely and frugally every April.
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