Today, Americans for Tax Reform continues to urge members of the House to oppose HR 4213, the tax extenders package. Click here for the PDF of this document sent to the Hill.
It seems Democrats continue to add to the list of tax increases in the package. Now, Congress is proposing a quadruple tax on oil – 32 cents a barrel – resulting in an $11 billion tax on energy producers.
Apparently confused about how taxes work, the Democrat Leader of the Senate, Harry Reid said “Taxpayers will not pick up the tab.”
There is no scenario where taxpayers will not pick up the tab. When the price of a barrel of oil goes up, gasoline prices at the pump increase. Companies must make a profit to continue paying payroll and operating costs. When their costs increase, for whatever reason, they cannot simply absorb that cost and continue functional as normal. Raising the tax 24 cents per barrel of oil will force energy companies to pass that cost increase onto consumers in the form of higher prices at the pump.
Not only will this make energy more expensive for every American family, this bill also violates the Taxpayer Protection Pledge by raising marginal income tax rates in two ways:
- It requires capital gains earned as the “carried interest” in an investment partnership to be taxed at one-quarter capital gains rates, and three-quarters ordinary income tax rates. This bizarre treatment raises the tax rate on these capital gains from 15 percent today to 37.25 percent once the 2001 tax relief expires at the end of this year and Obamacare’s investment surtax goes into law in 2013. This is a 150 percent increase in the tax rate on this important type of capital gains.
- Imposes the Medicare payroll tax (soon to rise to 3.8 percent for most small business profits) on small, service-sector Subchapter-S corporations. This means the top rate on service-sector S-coporations with three of fewer service-providing owners will rise from 35 percent today to 42.6 percent once the 2001 tax relief expires at the end of this year.
Additionally, Democrats are considering adding policies to bailout failing union pension plans. The provision would allow unions up to 30 years to amortize the 2008-2009 pension losses and 10 years to “smooth” losses for accounting purposes. This allows them to “hide” their current losses and liabilities – resulting in a balance sheet where the liability to asset ratio appears misleading.