U.S. House of Representatives prepares to debate making last year\’s tax relief plan permanent.
WASHINGTON – Tomorrow morning the House will vote on a bill to make permanent the tax relief enacted by the Economic Growth and Tax Relief Reconciliation Act of 2001, which passed Congress and was signed into law by President Bush on June 7 of last year.
The bipartisan tax relief plan included across-the-board income rate reductions, repeal of the death tax, marriage penalty relief, doubled child and adoption tax credits, as well as IRA/pension expansions and education incentives. However, the tax relief provisions of last year\’s law are set to be revoked on December 31, 2010, due to a sunset provision inserted by the Senate using a technical rule. So, to ring in the second decade of the twenty-first century, tax rates will jump back up to year 2000 levels, leaving few with a reason to celebrate the new year.
Most onerous will be the re-instatement of the death tax, which will phase out fully in 2009, but be reinstated two years later. On January 1st, 2011, the financial cost of dying in America will increase from 0% to 55% in one day. Furthermore, if the rate cuts are not made permanent, a family of four with an income equivalent to $46,756 in 2002 will face a tax hike of $1,928 in 2011- a 100% tax increase.
Taxpayer advocate Grover Norquist, who heads Americans for Tax Reform (ATR) in Washington, today demonstrated the travesty of sunset provisions. "Grandma will know that if she hangs on until one minute past midnight on New Year\’s Day 2011," said Norquist, "her family will have to hand over a half of the family farm to the taxman. Dr. Kevorkian may get more house calls on that night." Norquist said eliminating the death tax was a moral issue, and called it "an unjust double tax on assets that were bought with income that was already taxed, when it was earned."
Although the death tax is a major issue in the provision, many elected officials, including House Majority Leader Dick Armey, label the marriage penalty tax and child adoption tax just as " unfair and immoral," claiming that "Americans side with \’reductions in long-term overall tax rates\’ by more than three-to-one\’."
If the tax relief is made permanent by a vote tomorrow, once fully phased in some of the immediate benefits include: over 100 million individuals and families will pay lower taxes, 38 million families with children will receive an average tax cut of almost $1,500, and 13 million seniors will see their taxes reduced, on average, by $920.