The Majority’s budget conference report claims to extend numerous middle-income tax relief measures passed by a Republican Congress and signed by President Bush. This is an empty promise that is not backed up by the budget or the Democrats’ rules:
- The Largest Tax Increase in History. Though Democrats insist otherwise, the budget raises taxes by at least $683 billion over the next 5 years. These include increases in marginal tax rates; elimination of the 10-percent bracket for lower-income taxpayers; higher taxes on marriage, children, small businesses, and estates; and higher tax rates on investments. The tax hikes occur for two reasons.
- Required by PAYGO. The budget operates under the Democrats’ pay-as-you-go [PAYGO] rule, which requires capturing the full $683 billion in additional revenue from these tax increases.
- The Trigger. If they waive their PAYGO rule, the budget still contains a “trigger” that requires these tax increases unless surpluses are large enough to offset them.
But even if the Congress could overcome these two hurdles, the tax increase they admit to is “only” $347 billion over 5 years – still the largest tax increase in history, and bigger than the $240.6-billion increase in the Omnibus Budget Reconciliation Act of 1993.
Read the full report here.