Fighting for Texas Taxpayers
This year, the Democratic-led Congress has spent without reservation: $786 billion on a Stimulus bill with many provisions that will not actually curb the economic downturn; $1 trillion on an Omnibus Appropriations bill that will only fund government operations through October 1, 2009; and the Fiscal Year (FY) 2010 budget that proposes spending a total of $17.3 trillion over the next five years.
On April 15 - Tax Day - some in Congress may need a reminder of just who is underwriting this spending: the American taxpayer. I am deeply concerned over the swelling tax burden that will be imposed on all Texas families. Here are a few ways I am working to protect you from this burden:
Safety from the Marriage Penalty
In early April, I introduced an amendment to the FY 2010 budget to block the passage of any legislation that sought to impose a marriage penalty. The marriage tax penalty pushes married couples into a higher tax bracket than two single wage earners taking in the same combined income. As a matter of principle, the IRS should never do anything to discourage one of the most fundamental institutions of our society: marriage.
I began the fight to reverse this inequity in 2001. Under the old policy, an estimated 25 million couples paid a penalty of $1,141 for being married. In 2001, Congress eliminated the marriage tax penalty for many married couples as part of a series of tax cuts on families, small businesses, and retirees. On the first day of the 111th Congress, I introduced the Permanent Marriage Penalty Relief Act of 2009 to outlaw this tax policy, once and for all.
Given the challenge many families face today to make ends meet, raising taxes on married couples is unacceptable and unfair. My colleagues agreed, and my amendment to prevent this significant disincentive for Americans to walk down the aisle was unanimously passed in the Senate. This was an important victory that, if it goes through the House, will help married couples keep more of their hard-earned income and use their money to meet the needs of their families.
Extension of the Sales Tax Deduction
I also introduced an amendment to the FY 2010 budget to provide a permanent extension of the sales tax deduction, thus ending the discrimination suffered by taxpayers from states that do not have an income tax. Texas is one of eight states that imposes sales taxes in lieu of income taxes. Before 1986, taxpayers in these states had the ability to deduct their sales taxes like taxpaying citizens from states that impose income taxes. Unfortunately, citizens of some states were treated differently after 1986 when the deduction for state and local sales taxes was eliminated.
In 2004, Rep. Kevin Brady and I finally corrected this injustice by passing a 2 year reinstatement of the state and local sales tax deduction. Since then, we have provided extensions every few years, and the current extension is set to expire at the end of 2009.
After a series of negotiations, the Senate accepted a modified version of my amendment that I cosponsored with Senator Harry Reid (D-NV), the Majority Leader of the Senate. Federal tax law should not treat people differently on the basis of state residence and differing tax collection methods, and it should not create an incentive for states to establish income taxes. I will keep working in the Senate to ensure that Texans are not taxed on their taxes by fighting to make the sales tax deduction permanent in the final Congressional budget.
Fighting Long-Term Tax Hikes
Eliminating the marriage tax penalty and extending the sales tax deduction were significant achievements. But we must do more to prevent American families from being weighed down by a steadily growing tax burden. The Administration has proposed a tax increase of $1.4 trillion. While the rhetoric of the budget proposal suggests only the top 5 percent of wage earners will shoulder these tax increases, the fact is each and every American will bear a piece of this new burden. Such a tax hike sends the unmistakable message to every American taxpayer: the government knows how to spend your money better than you do.
I believe that American families know how to best use their money - particularly during times of economic hardship, when everyone is called on to make tough choices about their budgets and spending. And I am also convinced that the way to revitalize our economy is to lower taxes on families and small businesses.
In the past, Presidents from both parties, including Presidents Kennedy, Reagan, and Bush, have successfully employed tax relief to create jobs and spur economic activity. We should follow that path again. Congress must reign in spending and put America's budget back in order so we may rebuild the long-term foundation of our prosperity.
Kay Bailey Hutchison is the senior U.S. Senator from Texas and is the Ranking Member of the Senate Committee on Commerce, Science, and Transportation.