Bush Tax Rates/Unemployment Insurance Reauthorization Position and More

The following is in response to my letter sent out December 2, 2010:

Dear Mr. MacDonald

Thank you for contacting my office regarding the expiring 2001 and 2003 Bush tax cuts. I appreciate your views and having the benefit of your opinion.

As you know, the tax cuts commonly referred to as the Bush tax cuts were set to expire at the end of this year. Congress faced a significant challenge in determining whether all, some, or none of these cuts should be allowed to expire, and whether any extensions should be temporary or permanent. Complicating this question are two urgent challenges, our still fragile economy and our growing national debt.

On December 16, 2010, the House of Representatives voted to approve the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, sending it to the President, who signed it into law the following day. There were pieces of this package that I strongly supported, and other parts that were very disappointing. My position has always been that tax cuts should be extended for all families on income earned up to $250,000, which this bill does. These tax cuts will benefit families who were hit hardest by the recession and are targeted to individuals who are much more likely to put that money back into the economy in a way that sustains our economic recovery and creates jobs.

The bill contains additional tax benefits for the middle class including a payroll tax cut on the first $106,800 of income—a tax cut that, according to AARP and the Social Security Actuary, does not put at risk the Social Security Tax Fund. A couple earning $70,000 a year will see their taxes lowered by about $1,400 as a result of this cut. Extensions of the Child Tax Credit which provides a $1,000 credit to families with children and the Earned Income Tax Credit which benefits low income households are also included in the bill. All of these tax cuts will result in additional money for families, helping spur job growth.

The compromise also contained important provisions to help businesses grow and create new jobs in this difficult economy, including a two-year extension of the federal research and development tax credits and an extension of a measure allowing businesses to deduct from their taxes the cost of equipment and other qualified expenses.

The Fifth District was hit disproportionately hard by the recession, and several of our cities are still grappling with double digit unemployment. This bill extends for one year the current authorization for 99 total weeks of unemployment insurance for millions of out of work Americans who would have seen those benefits expire this winter. (It does not, however, create a new tier of benefits for those who have exhausted benefits beyond 99 weeks.) In addition to helping some of our most vulnerable citizens, economists note that every dollar of unemployment insurance generates almost two dollars in the economy.

All of these provisions respond to the absolute necessity that we enact measures that will accelerate our economic recovery and create jobs. But, we also have the extraordinary challenge of dealing with our nation’s debt and deficit, and this bill also includes unnecessary and regrettable provisions that exacerbate that challenge.

Unfortunately, tax breaks for the top two percent of income earners are extended at a cost of $79 billion. The package’s estate tax provision adds $24 billion to the deficit just to help an additional 6,600 people who are already millionaires several times over. In addition to adding to the deficit, these unnecessary provisions would do very little to improve our economy or create jobs. I supported an amendment that would have lowered the estate tax threshold to a much more reasonable rate, the same rate that was in place for 2009, but this amendment did not receive enough votes to pass.

While I find it extremely regrettable that the final package included certain provisions that would benefit only the privileged few, a defeat of the entire bill would have threatened our economic recovery and adversely impacted many of our most vulnerable citizens. As such, I voted to support the bill.

The American people want us to find a way to come together to grow the economy in the short-term and address the deficit in the long-term. The compromise that passed, while far from perfect, begins that process. And, when the Congress reconvenes in January, I believe it will be equally imperative that we recommit ourselves to this bipartisan goal on behalf of the people I represent and the millions like them across this country.

Thank you again for taking the time to be in touch. Please do not hesitate to contact my office in the future with questions or concerns. If you would like to see what I’ve been doing on behalf of the Fifth District, or to get my views on a certain issue, please visit my website at http://tsongas.house.gov.

Sincerely,

Niki Tsongas
Member of Congress