I’m hoping Mississippians took note on May 11 when the U.S. Senate passed the Tax Increase Prevention Act. It will prevent taxes from being raised on American taxpayers by some $70 billion. It continues the good trends in our national economy right now, including a minimal 4.7 percent unemployment rate and a gross domestic product that grew an astounding 4.8 percent last quarter. Statistics show tax relief done the right way works. It’s no longer theory, but now indisputable fact
Obviously, Mississippi’s unemployment rate is trailing the national average, while we work to recover from Hurricane Katrina, but our employment numbers, too, are looking better.
Even in the face of record gas prices, the nation’s worst natural disaster and a global War on Terror, the tax relief enacted during the Bush Administration has been able, not only to sustain our economy amid unprecedented challenges, but to actually grow it like never before.
That speaks volumes about the value of tax relief as an economic stimulus. President Bush enacted tax relief, and millions of Americans are glad he did. It came at the best possible time. The track record of economic growth since 2001 and the terrorist attacks is clear, and the wisdom of this tax relief plan which I helped craft in the Senate Finance Committee speaks for itself.
Our bill seeks to sustain America’s record $51 trillion household wealth and our low inflation rate. And, it ensures federal revenues will keep growing. Because of tax cuts, federal revenues grew more than 14 percent in 2005, to a record $2.5 trillion. The money is coming in because this President, like some others before him, knew that if you cut taxes in the right way, revenues for the public and private sectors increase in tandem.
Even in the face of such success, there are still some in Congress who don’t believe in tax relief; they hammer every tax relief package with the same old class warfare rhetoric: “tax cuts for the rich,” “wealthiest one percent.” Their slogans echo in the media, but seldom in the markets. Despite their weak arguments, this bill will become law and ensure America’s economy remains the world’s leader.
It will shield about 15 million middle-income American families from the Alternative Minimum Tax (AMT), an extra tax some have to pay on top of their income tax. Though originally designed to prevent higher income people from using loopholes to pay little or no tax, the number of people AMT reaches has grown to include many without high incomes. Our Senate-passed bill exempts the AMT for middle-income Americans making up to $62,550 for married couples and $42,500 for singles.
It also quadruples expensing for small businesses, allowing them to write off up to $100,000 a year in new equipment. These provisions alone will prevent a tax increase of more than $7 billion from being leveled against small businesses, the backbone of our economy.
Finally, the Senate bill holds the line on dividend and capital gains taxes. Most taxpayers have some stake in the market through dividends, and stock ownership is commonplace among working Americans. With home ownership at record levels, many Americans of all incomes can be impacted by capital gains taxes levied on the sale of major assets like homes whose values have appreciated since purchase. Capital gains taxes are actually a tax on productivity, investment and wealth accumulation of all kinds. That’s why these taxes should be cut.
Our Senate bill is good legislation because it helps anyone who has a job and pays taxes. Tax relief is helping America’s economy weather some of our nation’s most formidable challenges. It brings more money to both the public and private sectors. Tax relief as an economic stimulus is not economic theory anymore. It is fact, evidenced in our growing economy. America’s tax policies should reflect this fact, and sustain our growth.
Previous Column: American Soil: Illegal Immigrants have a Problem with America - Sen. Trent Lott
Senator Lott welcomes any questions or comments about this column.
Write to: U.S. Senator Trent Lott, 487 Russell Senate Office Building, Washington, D.C. 20510 (Attn: Press Office) or Email