Americans for Tax Reform President Grover Norquist today sent the following letter to Congressman Sander Levin (D-Mich.), Ranking Member of the House Ways and Means Committee:
On behalf of Americans for Tax Reform, I would urge all Members of Congress to oppose your bill, H.R. 5974, the “Invest in America Now Act of 2012.” Your bill is a net tax increase, raises taxes permanently on employers in exchange for a provision they already have, and is bad tax policy. No Member who is concerned about creating American jobs should support H.R. 5974.
Your bill is a net tax increase. H.R. 5974 does two things: first, it extends for one year the tax provision which allows most business assets to be expensed in the year of purchase (rather than slowly-deducted, or “depreciated,” over many years). Moving to “expensing” is the right tax policy. But it’s tax policy that’s already in the code. H.R. 5974 doesn’t advance tax policy in this area so much as prevent the degeneration of good tax policy. Yet for this non-victory, your bill imposes a permanent new tax hike on employers. Why would you want to impose a permanent new tax increase on employers in exchange for nothing new? Why is a permanent net tax hike on employers a good idea when unemployment remains stuck at over 8 percent? How many jobs will this net tax increase create in your view?
Your bill raises taxes permanently on employers. It’s a bad deal to have a permanent new tax increase on employers in exchange for employers getting to keep what they already have–yet this is what H.R. 5974 proposes to do. It “pays for” an extension of existing tax rules on expensing by denying the “domestic production activities deduction” (Sec. 199) to major integrated oil companies. This is a permanent tax increase in exchange for merely not taking away an existing tax provision for just one year.
Your bill is bad tax policy. By singling out major integrated oil companies, H.R. 5974 picks winners and losers in the tax code. Section 199, which was initially available to all employers, was cut by one-third for energy companies several years ago. H.R. 5974 doubles down on this discriminatory treatment. Section 199 should be a broad-based way for companies to deal with the fact they face the highest corporate income tax rate in the developed world, not a political football used to score cheap political points.
A tax philosophy characterized by permanent new tax hikes just to keep existing tax relief temporarily is a recipe for long-run major net tax increases. It results in having to “pay for” the same existing tax provisions over and over again every year with new and permanent tax hikes. H.R. 5974 is a bad deal for taxpayers, and Members of Congress should oppose it.