House Speaker John Boehner (R–OH) announced yesterday that the House is gearing up to vote prior to the November election on extending all of the tax provisions scheduled to expire at the end of the year. This is welcome news, given the necessity of swiftly steering this tax policy train in the right direction. Otherwise, Congress assuredly would face an even bigger train wreck—scores of laws expiring during a politically charged, whirlwind lame duck session of Congress. The whopper Boehner is referring to? Taxmageddon: a list of expiring tax policies that would result in an unprecedented $494 billion tax increase on Americans in 2013 alone.
As Heritage’s Curtis Dubay writes, “Almost 34 percent of the tax increase from Taxmageddon comes from the expiration of the 2001 and 2003 Bush tax cuts,” which reduced marginal tax rates for millions of Americans and included an increase in the Child Tax Credit and a reduction in the marriage penalty. Thus, the tax increases of Taxmageddon would adversely affect Americans at all income levels, not just “the rich.” Other provisions expiring include the payroll tax cut, alternative minimum tax patch, and a series of tax extenders. Eighteen tax hikes under Obamacare, totaling $23 billion, will strike in 2013 as well—and that is just a foretaste of those promised.
Extending all of these expiring tax policies as soon as possible is absolutely crucial to establishing certainty in the minds of businesses, families, and investors. Right now, they are unsure of what their tax liability will be next year, which severely curtails their ability or inclination to hire new workers, plan for the future, and make investments.
Just as Speaker Boehner has declared the House will act before the November election, the Senate and President Obama should follow suit. Every day they tarry exacerbates the already rampant uncertainty plaguing the sluggish economy. Moving to extend these tax provisions now will assure businesses, families, and investors that they need not fear this massive tax increase on New Year’s Day 2013. Congress is already facing a slew of other high-profile issues it must address this fall, including the debt limit and automatic spending cuts under the Budget Control Act of 2011. It is good, sound policy to take care of Taxmageddon now and strike it from the list of lame duck must-dos.