U.S. Senator Richard Shelby (R-Ala.) today cosponsored the Tax Hike Prevention Act of 2010 to permanently extend the 2001 and 2003 tax relief provisions.
“I believe it is imperative that we reduce the enormous tax burden Americans currently labor under,” said Shelby. “Raising taxes takes money out of the pockets of hardworking Americans and job creators. The only thing worse than raising taxes is doing so under difficult economic conditions, as President Obama proposes. Allowing our existing tax rates to expire will cause the largest tax increase in America’s history, which is why I strongly support this legislation to prevent it.
“At the same time, it is critical that we rein in the significant debt the Obama Administration has piled on future generations. I have introduced a Balanced Budget Amendment to the Constitution every Congress since joining the Senate in 1987. As a senior member of the Appropriations Committee, I also support Republican efforts to cap discretionary spending. I will continue to advocate for such measures that restore fiscal responsibility to our government.
“President Obama enacted a $787 billion stimulus package that clearly did not work. Instead of focusing on the economy, he then spent over a year forcing down the throats of the American people a new trillion dollar health care entitlement program. President Obama now wants to claim he is being fiscally responsible by raising taxes on job creators when unemployment is near ten percent. He is not fooling the American people, just himself.”
The Tax Hike Prevention Act of 2010, S. 3773, specifically:
•Preserves the 10%, 15%, 25%, 28%, 33%, and 35% income tax brackets – rather than allowing President Obama to achieve his goal of a maximum official tax-rate bracket of 39.6%.
•Preserves the tax on capital gains and dividends at 15%. If the existing tax cuts are not extended, the tax on dividends will increase from the current 15% to a maximum rate of 39.6%. Capital gains taxes would increase from 15% to 20%.
•The death tax reform section is comprised of the bipartisan Lincoln-Kyl estate tax reform proposal. It provides for a 35% estate tax rate; a unified estate/gift exemption amount of $5 million (per individual), indexed for inflation; and a stepped-up basis for inherited assets. For the year 2010, estates can elect to retain the zero rate and carry-over basis of current law (and capital gains tax would apply to the carry-over basis when the asset is sold) or opt into the Lincoln-Kyl structure. For estates that settle after 2010, assets will be inherited at a stepped-up basis and subject to a 35% tax rate (with a unified estate/gift exemption of $5 million, indexed for inflation).
•Creates a “patch” for the individual Alternative Minimum Tax (AMT). The bill significantly increases the AMT exemption amount so that only 3.9 million families will be subject to it in 2010, as opposed to the 22 million who will be affected if this “patch” is not enacted. This proposed AMT “patch” would be permanent.
•Eliminates the hidden tax-rate increases that President Obama has planned for 2011. The Personal Exemption Phase-out (PEP) and the Pease limitation on itemized deductions had increased tax-rates beyond the “official” tax rates, but have been eliminated over the last few years – President Obama would like to bring back hidden taxes. PEP and Pease act as penalties for having children, for giving to charity, and for claiming a mortgage deduction.
•Continues the tax relief provided in the 2001 tax cuts regarding the marriage penalty.
•Continues the progressive child tax credit at $1000 per child, rather than letting it fall to only $500 per child.