by Congressman Ken Calvert
New Years Eve is usually a night to celebrate, but if Congress and the President don’t act soon, taxpayers may not be in a partying mood when the clock strikes twelve at the end of 2012.
As things stand now, the 2001 and 2003 federal tax cuts are set to expire at midnight on December 31, 2012. The result will be a massive tax hike on individual taxpayers as well as businesses. With our economy still struggling, the last thing we need is a tax increase.
The increase in marginal personal income tax rates hits all wage earners and a significant number of small businesses that pay taxes at the individual income tax rates. On top of that increase, many small businesses will also be affected by a number of other expiring tax provisions.
Small business expensing provisions, which allows small businesses to deduct immediately (instead of recovering over time) the cost of placing equipment into service, will be dramatically reduced making it more expensive to invest in capital improvements.
Family businesses also face an increase in the so-called “Death Tax.” Specifically, the exemption amount will drop to $1 million (not indexed for inflation) and the top rate will jump from 35 percent to 55 percent. If this were allowed to occur, many family businesses would be essentially forced to close and liquidate the business to pay off the “death tax” liability.
With unemployment still at historical highs in Riverside County, we simply cannot afford to allow these tax hikes to occur. That’s exactly why I voted along with a majority of the House of Representatives to extend all of the 2001 and 2003 tax cuts.
I am hopeful that the United States Senate and the White House, both controlled by the Democratic Party, will act soon to do the same so that the only thing Americans might have to fear on New Years Day is a hangover.