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Tax Relief Coalition Letter to U.S. Senate and House of Representatives on Tax Rate Reductions

To All Members of the U.S. Senate and House of Representatives

The Tax Relief Coalition (TRC) is an organization of more than 1,000 trade associations, corporations and advocacy groups that was formed in 2001 to advocate for pro-growth tax policies. Our members represent 1.8 million businesses and millions of individuals; businesses of all sizes, from every state and from every industry sector, that invest in our economy and create jobs.

We are writing today to urge you to act promptly to extend all of the tax rate reductions enacted in 2001 and 2003 which will expire on December 31st. Specifically, we believe that the lowered rates on all levels of individual income, as well as on capital gains and dividends, should be made permanent. Further, we believe that this decision should be made by a straight up-or-down vote of ALL members of both the Senate and the House of Representatives.

At a time of severe economic distress, raising taxes on businesses, investors and individuals is counter-intuitive. Tax increases will discourage Americans from further investing in the economy.

The impact of the higher tax rates on the small business sector of our economy is particularly troubling. Roughly one-third of all business taxes are paid by owners of flow-through businesses – the sole proprietorships, partnerships and S corporations that are often small in size and entrepreneurial – since these enterprises file individual tax returns. These small businesses are a critical source of job creation and innovation.

Shortly before Congress adjourned for the election recess, the nonpartisan Tax Foundation released a report showing that about 39 percent of the $630 billion tax increase on high-income taxpayers (defined by President Obama as individuals earning more than $200,000 and married couples earning more than $250,000) in 2011 would come from business income. This amounts to an extra $246 billion in taxes on business income over 10 years.

“The fact that ‘only’ 2 or 3 percent of taxpayers with business income would face higher taxes is meaningless to the debate,” said Tax Foundation President Scott Hodge, who authored the paper. “What matters most is not the number of taxpayers impacted, but the amount of business income – and, therefore, business activity – impacted.”

In the same week, another analysis by the Thomson Reuters University of Michigan Survey of Consumers suggests higher-income households are already scaling back their spending plans in anticipation of higher taxes. The report said a prolonged congressional debate over tax policy could cause such uncertainty to spread, contributing to economic weakness. The report concluded that the ongoing debate in Washington over whether to extend the 2001 and 2003 tax cuts “has already negatively affected the economic expectations.”

As reported by the Wall Street Journal (September 10, 2010), postponing a tax-cut extension could “push the economy even closer to a double dip. Given the weak outlook for growth, the uncertainty aroused by a prolonged debate may be penny wise and pound foolish.”

These reports and analyses were done before Congress adjourned for the October election recess without acting on the tax rate extensions; if Congress fails to act on these critical tax issues before sine die adjournment the negative economic impact will be even greater as tax increases take effect on January 1st.

There is ample evidence that a bipartisan majority of the House and Senate would support legislation extending all current tax rates to ensure that no American faces a tax increase in this difficult economic environment.

We believe that it is essential that the Senate and House of Representatives vote on these critical matters during the Lame Duck Congressional session. We urge every member of the Senate and House to insist on the opportunity to cast an up-or-down vote on legislation to extend ALL of the expiring tax provisions. Anything less than a full debate and an up-or-down vote on extending ALL of the expiring provisions would deny many Members of Congress the right to effectively represent their constituents.

Again, we call on Congress to bring an end to uncertainty by extending all of the current tax rates established in 2001 and 2003.

Sincerely,
 

Grover Norquist 
President 
Americans for Tax Reform

Stephen E. Sandherr
Chief Executive Officer
Associated General Contractors


Larry D. Burton 
Executive Director
Business Roundtable

Jon Eisen
Senior Vice President-Government Relations
International Foodservice Distributors Association

Jay Timmons 
Executive Vice President
National Association of Manufacturers

Dirk Van Dongen
President
National Association of Wholesaler-Distributors

Jade West, TRC Executive Secretariat 
Senior Vice President-Government Relations
National Association of Wholesaler-Distributors

Dan Danner
President & CEO
National Federation of Independent Business

R. Bruce Josten
Executive Vice President-Government Affairs
U.S. Chamber of Commerce

 

To view a list of TRC members, go to: http://www.naw.org/files/TRCmembers.pdf