(202) 225 - 3130
WASHINGTON – House Democratic Whip Steny Hoyer (D-MD), Ways and Means Ranking Democrat Charles Rangel (D-NY), and Ways and Means Committee Member Rahm Emanuel (D-IL) released the following statements today in anticipation of tomorrow’s House Ways and Means Committee hearing on tax reform. Also attached are general principals that Democrats believe must guide any tax reform that will benefit America’s middle-class.
“Republican tax policies have shifted the tax burden to the middle-class, exploded our nation’s debt and made the tax code even more complicated for small businesses and taxpayers,” said Hoyer. “The Republicans’ decision not to fix the Alternative Minimum Tax, which is unfairly forcing middle-class American’s to pay more in taxes, is a prime example of their misplaced priorities. Democrats believe tax reform must make our tax code fairer, simpler and more fiscally responsible. I hope tomorrow’s hearing will put us on a fast track to addressing these issues in the right way.”
“The Republicans say they want to pull the tax code up by the roots but, in the last five years, they’ve just added fertilizer to it. Like Social Security, tax reform screams out for bipartisanship. We can work together and enact a tax system that is simpler, fairer and more responsible but only if Republican leaders stop using the need for tax reform as a pretext for passing their radical agenda of removing taxes on all of those with vast wealth and placing the burden entirely on America’s working families,” said Rangel.
“Tax reform needs to respect the work and values of middle class families making the code simpler and more aggressive. In the last three years, the code has become filled with special breaks for special interests,” said Emanuel. “It is time to make middle-class families the interests we serve.”
Attached is an outline of principles on tax reform.
DEMOCRATS ARE FIGHTING TO MAKE AMERICA’S TAX LAWS SIMPLER, FAIRER AND MORE RESPONSIBLE
Republican tax policies have shifted the tax burden to middle-class families, caused even greater tax complexity and exploded the national debt.
Republican tax policies reduce progressivity and disproportionately benefit the wealthiest taxpayers.
• Middle-income households, not the richest households, paid a higher share of federal taxes following the 2001 tax cuts, according to data compiled by CBO.
• In 2004 alone, tax cuts for the top 1% of households (with incomes averaging more than $1 million) were worth nearly $80,000, or 10.1% of their after-tax income. The bottom 20% of households (with incomes averaging less than $17,000) received only a $250 tax cut on average, or just 1.6% of their after-tax income.
Despite Republicans’ repeated pledges to simplify our tax laws, they have made the tax code even more complex.
• Republican tax policies have added more than 10,000 pages to the tax code and regulations in just the last four years. Republicans in Congress orchestrated nearly 900 changes to the tax code in the 108th Congress alone.
• The costs of tax complexity are staggering – more than $100 billion a year in accounting fees and the value of taxpayers’ time to complete their returns. (Joel Slemrod, tax expert at the University of Michigan)
Republican tax policies have exacerbated the complicated and unfair Alternative Minimum Tax (AMT), which is shifting the tax burden to middle-income families.
• An estimated 3 million taxpayers will be subject to the AMT in 2004; that number will explode to 35 million in 2010.
• The AMT was designed to ensure that high-income taxpayers pay their fair share, but Republicans are using it to deliberately hold down the costs of their tax cuts and shift the tax burden to middle-income families. By 2010, households with incomes between $75,000 and $100,000 will be 18% more likely to be subject to the AMT than those with incomes of more than $1 million.
Republican tax policies have exploded our national debt, irresponsibly and immorally forcing our children to pay our bills and leaving our nation vulnerable to foreign creditors.
• Republican tax policies, in large part, have forced Congressional Republicans to raise the statutory debt limit three times in three years ($450 billion in 2002; $985 billion in 2003; and $800 billion in 2004). The GOP budget passed in April calls for a fourth increase in the debt limit by $781 billion. The Government Accountability Office projects that interest on the national debt would nearly equal total federal revenues in 2040 if the recent tax cuts are made permanent.
Democrats are fighting to make America’s tax laws simpler, fairer and more responsible.
Fairness: We must uphold our commitment to a progressive tax code that is fair to the middle-class. Millions of Americans are paying more than their fair share because of an overly complicated, loophole-ridden tax code. We believe that real reform must include a solution to the unintended consequences of the Alternative Minimum Tax.
Simplification: Democrats strongly support tax simplification. Our tax laws are far too complex, which gives some the opportunity to exploit that complexity to avoid compliance, while shifting more responsibility to law-abiding working Americans who play by rules.
Responsibility: Democrats believe that we must not add to the deficit and national debt. Democrats are committed to tax reform that is revenue neutral, helps balance the budget and does not result in continued borrowing from the Social Security trust fund.