The conservative House Republican Study Committee (RSC) proposed last week to cut taxes on families and businesses to stimulate the economy. The proposal, detailed last week in a press conference is a free market alternative vastly different from the Democrat trillion-dollar leviathan spending bill disguised as a “stimulus” bill.
The “Economic Recovery and Middle-Class Tax Relief Act of 2009” (HR-470) has already garnered the support of the Americans for Tax Reform and the National Taxpayers Union.
The Republican bill focuses on tax cuts that are designed to help families keep more of their own money in several different ways. It would provide immediate tax relief with a five percent across the board income tax cut beginning with the upcoming filings this year for the tax year 2008. It would make these new lower tax rates permanent. With an emphasis on working families, the bill would increase the child tax credit from $1,000 to $5,000 per child and make that tax credit permanent for each child in the household under the age of 17. This would also begin in tax year 2008.
Other tax incentives would include making permanent the lower 15% capital gains tax, repealing the alternative minimum tax on individuals and would make all withdrawals from IRAs tax- and penalty-free during 2009.
“After a year of rebates and taxpayer-funded bailouts, it should be clear to all that the approach of throwing huge sums of money at the problem has utterly failed. … Rebuilding the economy takes more than rebuilding roads. It requires an embrace of the fundamental, economic and market principles which gave us the greatest economy in the world,” said RSC Chairman Rep. Tom Price (R-Ga) at the presser introducing the bill. “This bill provides the appropriate ability for all American taxpayers to keep more of their hard-earned money. It allows for businesses to have the environment to create more jobs and stimulate this economy and begin to decrease the debt burden on future generations. We believe, frankly, this is what the Congress would coalesce behind if given the opportunity.”
Addressing the Democrats claims of between two and four million jobs that would be either created or saved in their bill, depending on which day and what Democrat is making the claim, Rep. Scott Garrett (R-NJ) warned that the type of job created by the Democrat bill were menial and temporary jobs. “Americans want more than just jobs, they want careers, they want private-sector jobs and this legislation will go a large step in that direction,” Garrett said.
Jim Jordan (R-Ohio) spoke about the fundamental differences between the Democrats bill and this Republican alternative. “We live in an imperfect world and because of that you’re going to have economic downturns. We’re certainly in one now. The question is how to get out of it. Are you going to trust government or are you going to trust the American people. … This bill says that we prefer to trust families and small business owners because we know that works. We’ve seen how the bailout fever has gripped Washington and what that’s given us over the last year and a half.”
The Republican bill would also permanently repeal required distributions on retirement accounts, repeal the Alternative Minimum Tax on individuals and increase by 50% the tax deduction on student loans and qualified higher education expenses.
In addition to substantive tax relief that let’s Americans keep more of their own money, the Republican alternative bill gives economic relief to businesses, the engine that drives this economy. This allows for the expansion of small business and hiring more workers along with acceleration of investment.
“I was a small businessman before I came to Congress so I understand how you create jobs and I understand how the economy works,” said Rep. Randy Neugebauer (R-Texas). “When my business began to get better was when I could keep more and more of my money in my business and build up equity. We are doing no good for the American people when we are building up debt. If you want to stimulate this economy you begin to put equity in America’s small businesses. … Taking money out of the economy and giving it to the federal government… does anybody believe that the federal government can go and spend this year a trillion dollars, officially? If you do, I’ve got some swamp land in West Texas to sell you.”
These and other measures such as ending the Capital Gains Tax on inflation and simplifying that tax structure along with making permanent the research and development tax credit are designed to actually stimulate the economy.
More importantly, the Republican alternative would avoid the trillion dollar spending spree proposed by Democrats. Even giving the Democrats the benefit of the doubt, stipulating that their “stimulus” bill would actually create or save 3 million jobs (averaging the number between the claims of 2 and 4 million), the Democrat legislation would spend $275,000 for every job it claims to create. The average household income in the U.S. is $50,000. The numbers speak for themselves. There is something really wrong with the Democrat plan.
“What you’re hearing from the members is a common sense approach to solving this economic meltdown that we currently find ourselves in,” said Rep. Phil Gingery (R-GA). “Government throwing trillions of dollars at a problem with absolutely no oversight and no accountability is not going to solve the problem. We have seen that. We have spent $350 billion in the first tranche, the so-called rescue package, and where has it gone? We do know that $4 billion or more went to Chrysler and General Motors. But where did the rest of it go to? Big banks, national banks, regional banks — purportedly to unfreeze credit to people, small businessmen and women, and none of that has happened. The essence of this bill is to say to individuals and small businessmen and women that we are going to give you an opportunity to keep more of your own money so that you can stimulate the economy either by growing jobs or by individuals having more money to spend. This will work. I guarantee you, this will work. This top-down approach of the government writing more checks and printing more money is not going to work.”