The Facts About Tax

Washington is an alternate reality town where fiction and fable masquerade as fact if repeated often enough or left unchallenged, and where political score keeping is often more important than what is good for the country. The current debate on the compromise over the Bush tax cuts is progressing true to the normal Washington playbook and needs to be challenged by the real facts as we best know them. While we don't yet have a complete accounting of the package, many of the provisions' costs can be assessed based on estimates of similar measures that have been previously proposed in Congress. At present, that the facts are as follows:
  • The most economically significant aspect of the package is the extension of the Bush tax cuts for families making less than250,000. This extension will cost approximately 385 billion over two years
  • The cost of extending the tax cuts to highest income families is approximately75 billion and the cost of extending the estate tax provisions is expected to be about 55 billion.
  • With a cost of roughly56 billion, the package would leave in place for 13 months the option to file for extended federal unemployment benefits for those seeking work in states hit hardest by unemployment.
  • All workers would receive a payroll tax holiday worth 2 percent points on their payment of social security taxes in the package. That measure would cost 120 billion.
  • A number of individual tax credits that benefit low- and middle-income tax filers, such as the earned income tax credit, the child credit and a revamped tax credit for college costs would be included in the package. These measures would cost 40 billion.
  • The package would also include a number of business tax credits aimed at securing America's innovation leadership and encouraging investments in areas such as manufacturing, and research and development (R&D). These investments incentives would cost approximately 40 billion.

In spite of all of the heated rhetoric by various' talk show hosts and pundits, the package is neither liberal nor conservative. It is a real path forward towards stabilizing our economy and regenerating sustainable growth. For example, we know that reauthorizing the R&D tax credit will provide a significant return on the planned investment through both job creation and identifying important break through technologies that will improve our economy and people's lives. In fact, we should make it permanent.

Members of the Senate and House should focus on these real facts and pass this measure. In the new year, the 112th Congress should rekindle a bipartisan strategy. Together, we can reaffirm a resolution for America by investing in our key national priorities as well as reducing the national deficit.