Beginning January 1, 2011, American families and small businesses will be saddled with a $3.8 trillion tax increase – the largest tax hike in American history. There are many in Washington who are claiming that these tax increases will only affect the wealthy. Simply put, this is inaccurate. Instead, they will increase the tax liability of almost every American who pays income taxes – including middle-income American families and small businesses owners.
And these tax increases will not just apply to income taxes. Taxes across the board will increase dramatically. Taxes on capital gains – income made on sales of stocks – and dividends – profits paid to stockholders – will rise between five and twenty five percent. These considerable increases could cause a massive sell-off of assets and stocks at the end of 2010, creating a panic in the market similar to what we saw at the end of 2008, hindering our recovery and damaging our already fragile economy. The marriage penalty will be reinstated, punishing those Americans wishing to file joint incomes with their spouses, and the child tax credit will be cut in half.
And just like American families, small businesses will also be forced to fork over even more of their hard earned money with these new tax hikes. According to the nonpartisan Joint Committee on Taxation, 94% of all US businesses in 2007 filed taxes on their owners’ individual forms – meaning they too will be affected by these dramatic tax increases in 2011. Small businesses account for roughly 70% of all job creation in this country, and increasing their tax liability during one of the worst economic recessions in a generation will do nothing more than kill job creation and stifle economic improvements across the board.
Over the next six weeks, I will send out a weekly report addressing some of the specific tax increases that will begin on January 1st. An issue of this magnitude needs to be fully explained with facts and numbers – and that’s what I’m hoping to be able to give to you. If you would like to keep up with the special report, I encourage you to visit my website at www.house.gov/lucas and select “Special Report: Tax Talk.”