A fairer system
When Congress takes up legislation to make permanent the middle- and lower-class tax cuts, the Bush tax cuts for the wealthy should be eliminated. Why should the wealthiest Americans get breaks while working families struggle? It is vital that our Congressional delegation do not try to simply kick this can down the road for another year or two. Such a decision would do short-term harm and increase the risk of major long-term damage.
As Associated Press stories run by the Las Vegas Sun last week illustrate, the Senate is struggling with whether to extend the 2001-2003 tax cuts, which expire in January, either temporarily or permanently. President Obama wants to make the tax cuts permanent for middle- and lower-income taxpayers, while allowing the top rates to increase next year for individuals making more than $200,000 and couples making more than $250,000. The top rate would return from 35 percent to 39.6 percent.
One of those tax cuts that needs to be made permanent is the refundable child tax credit. If Congress fails to act, 152,000 Nevada families would see credits lost or reduced in 2011. They need to be made permanent now. A single parent working full time at minimum wage might see their tax credit cut almost $1,500. If these credits are continued, that money will all be spent in Nevada.
The Earned Income Tax Credit (EITC) has been a great way to help working families keep more of their income. A proposal is being made to give families with three-plus children more EITC benefits. We all know that they have higher living expenses than smaller families. We should adjust the EITC to recognize this fact. Some 95,000 Nevada children could lose some of their EITC benefits. We can’t let that happen.
As the Center on Budget and Policy Priorities notes in its July 26, 2010, analysis, failing to allow the tax cuts for the wealthy expire would be a great mistake. Forty billion dollars in revenue would be lost in 2011 alone. That money could be used for deficit reduction or further needed economic stimulation. While middle and lower income taxpayers are likely to spend their tax savings in the economy, the wealthiest 3 percent are less likely to do so.
A Congressional Budget Office analysis suggests that using those savings for a combination of a job-creation tax credit and continued state fiscal assistance would generate three times as much additional economic activity as extending the tax cuts to the wealthy.
We should not give relief to the very wealthiest, but we should help struggling working families. We urge our delegation to stand firmly with the president.